A procurement services provider to the hospitality sector has revealed that at least two of its members do not intend to open their businesses for the rest of the year – and warned that the prospect of lost custom in the busy spring and summer periods could leave operators in coastal areas facing financial ruin.
Regency Purchasing Group, which supplies food and catering items to more than 3,000 businesses, said it was concerned that a “significant proportion” of the leisure and hospitality industry may not be operational again until next year.
Two of its members – understood by FEJ to be larger, well-known visitor attractions – have already confirmed to Regency that they have written off 2020 and will not reopen again until March 2021.
Regency managing director, Alex Demetriou, said the current situation was particularly devastating for coastal businesses, as they must make money in the spring and summer to get through the winter season, when many typically incur losses.
Without the profits from the peak period, shutting until next year might be the only “viable” option for some businesses, he said.
“The number of businesses that choose not to reopen for the winter period will have a negative knock-on effect to the economy, with tax contributions such as VAT, alcohol duty, PAYE and National Insurance all reduced, thus adversely affecting the UK’s economy ability to bounce back.
“Indeed, further damage could be done for those that do try to get through the winter and end up having to close permanently, because they were not able to survive those quieter months.
“Beyond this, the businesses that choose not to re-open until next year will inevitably let staff go once the furlough period is over, so we can expect to see higher levels of unemployment that could be concentrated around the coastal towns of the UK.”
On Sunday, Cabinet Officer minister, Michael Gove, confirmed pubs, restaurants and hotels will be among the last to reopen when the coronavirus lockdown is relaxed.
Mr Demetriou said one of the challenges operators face is that they cannot yet predict the behaviour of customers once lockdown is lifted.
“We will be living in a new world and as yet, no one knows whether it will be better or worse. Just because a business was successful before the pandemic, does not guarantee the same business model will be as good afterwards, while others that were doing good enough, may thrive following a change in behaviour.
“It is clear from surveys already undertaken that different age groups intend to behave differently once this lockdown is over. The younger and less vulnerable want to get back to normal life and intend to re-visit bars and restaurants as they did previously, whereas the elderly are stating they will be more cautious. Again, going back to the coastal community, away from school holiday periods, they are heavily reliant on the older demographic day visitors for trade. If they choose not to come out, it could be another hit.”
Mr Demetriou’s concerns come as research published today revealed that two thirds of hospitality companies believe they will not survive a prolonged lockdown without further far-reaching support from government, and the vast majority believe a significant break or ‘holiday’ from rent obligations is required.
The study by KAM Media, which involved 211 hospitality companies – ranging from businesses operating pubs and bars to restaurants, cafes and street food venues – showed that 66% of businesses do not think they can survive a further three months of lockdown measures.
Katy Moses, managing director at KAM Media, said: “So many hospitality businesses are at risk and we need help in navigating a pathway to safety. We need some fundamental interventions on rents and property, and on finance and loans, and it’s becoming clear that much of hospitality will require a much longer extension of the furlough scheme, given that businesses will not emerge fully from lockdown for some time.”
The research found that 83% of those questioned expect customer numbers to be down for at least six months after re-opening.
And 38% said they would expect it to take at least a year for their footfall to return to pre-lockdown levels.