Industry Update
Opinion Article26 May 2020

Lifting The Lockdown: What’s Next For Hospitality?

By Gareth Ogden, Partner at haysmacintyre

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As the UK looks to emerge from the COVID-19 lockdown, business leaders have been calling upon the Government to set out its plan for how we might return to some sense of normality. Unsurprisingly, the hospitality industry has been amongst the most vocal, given numerous concerns over the practicalities of reopening venues under social distancing guidelines.

Last week, the Government published its initial recovery strategy: a 51-page document supposedly setting out the steps to rebuild the UK. However, this still only gives a sense of a plan as to how the hospitality industry might be expected to reopen. Indications are that a phased approach to reopening venues is likely, with priority given to those best suited to operating under social distancing rules, such as café's with open outdoor space, perhaps followed by restaurants, and then, in time, pubs. The timing remains uncertain as scientists continue to monitor the spread of the virus, but the initial lifting of restrictions on the hospitality sector will be no earlier than 4 July 2020.

Yet, despite this outline, anxiety remains prevalent throughout the sector. Before even contemplating reopening, more detail of the continued provision of Government support and further information on the 'COVID-19 secure' guidelines which venues are expected to follow is urgently required. As businesses continue to grapple with the hugely challenging financial and practical considerations of operating with staff and customer safety as a priority, on top of the issue of drastically reduced capacity, it is clear that the sector needs and deserves more clarity.

One welcome piece of news last week was the announcement of the extension to the Coronavirus Job Retention Scheme, which will now run until October. This will undoubtedly offer some initial peace of mind, but the changes have done little to alter the fact that the scheme remains a one size fits all solution. More detail on suggested flexibility from August, where businesses using the scheme will supposedly be able to start bringing back furloughed employees on a part-time basis, will be vital. Hospitality operations cannot simply be switched on overnight and therefore sector differentiation was notably missing from the announcement.

Amidst all of this, the greatest uncertainty facing hospitality businesses remains: how will consumer demand be impacted? To what extent will a British public, which has so far been generally supportive of lockdown and social distancing measures, be tempted back into bars and restaurants? With personal finances likely to be affected and safety concerns paramount, will the inherent risk of a night out be worth it where COVID-19 measures render their much-desired social experiences unsatisfactory? And for those who are keen to return, will they do so responsibly?

The absence of any real clarity over what the future holds means that many hospitality operators still have serious concerns over the longer-term viability of their businesses. As cash flow pressures remain critical, with fixed overheads and financing costs to be serviced whilst operating at under-capacity for the foreseeable future, it remains to be seen just how many businesses will consider it feasible to reopen at all.

Gareth Ogden

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