The crisis facing the industry hit hardest by Covid
By Nichi Hodgson
I remember with clarity and a pinch of stomach-hollowing dread that night back on 19 March 2020 when Boris would not shut the pubs. Hospitality venues up and down the land were, counter-intuitively to the general public, clamouring for the Prime Minister to do so. This was a time when not honouring the instruction to stay at home, protect the NHS and saves lives, was tantamount to sedition. To leave bars and cafés open, when schools and nurseries had already been instructed to shut their doors, would make them scapegoats for the ensuing health catastrophe that was about to erupt.
As a bar owner’s wife (my husband Ferdie Ahmed owns the London-based Barrio group of Latin bars, and a sexy 60s’ themed cocktail bar called Disrepute in Soho), the feeling that the hospitality industry, on which our livelihood and that of millions of others depended, had been hung out to dry hit me like a barrel of pale ale thudding down into a cellar – ale I knew would soon be undrinkable. But it wasn’t until that night in March we sensed there was something more afoot. The Government had decided there was a pecking order when it came to ensuring the survival of certain businesses, and the nation’s pubs, clubs, restaurants and hotels were at the bottom of it.
For many, it was simply untenable that an industry that’s the UK’s third largest employer, with an economic contribution of £130 billion annually, could be left to flounder this way. But, beholden to complicated licensing laws and tied to physical premises that needed upkeep wherever the punters may be, hospitality has suffered in a way retail (which can function online and better weather social distancing) wouldn’t have survived.
Fear not, came the message from Downing Street, we will provide financial support to help you survive while your taps stay dry. But then the packages came and they were neither industry-appropriate, nor adequate.
Take the business rates relief offered back in March 2020. This was a discount offered to every hospitality property in the UK. But from the off, it wasn’t modelled as a proportion of revenue or profits, rather there were two broad brush brackets: meaning a small village pub and a large West End bar could be receiving the same discount, despite their vastly different costs.
In the hospitality sector, rent is between eight to ten per cent of annual turnover. Around 70 per cent of businesses are still in three quarters of rent arrears. So it’s one of the biggest issues we have
And while furlough may be a lifeline for many employees across sectors, it has not stemmed the tide of hospitality redundancies. As Mike Kill, CEO of the Night Time Industries Association, points out, “We won’t know how big the unemployment side of things is going to be until furlough ends. But we looked at the Irish figures which said 80 per cent of people who’d lost their jobs were from the hospitality sector as a whole.”
Seb Lyall is the founder and creative director of Lollipop, an immersive lifestyle group that, pre-pandemic, was offering ABQ London – a Breaking Bad-style immersive cocktail bar.
While his business pivoted to home delivery cocktails last year and was able to utilise furlough for some of his staff, it hasn’t been the golden ticket the Government painted it to be. “Furlough is great for employees but not for business owners. In particular, the fact that employees have been able to accrue holiday during furlough is yet another cost for the employers. How does that make sense?”
Meanwhile, the one-off grants of £9,000 issued to support businesses through the January 2021 lockdown felt arbitrary from the start. Lyall criticises the Government for not understanding the amount of fixed costs hospitality businesses have: “We have to pay rent, utilities, insurance, and the support for that was very limited. The mistake was not to think about hospitality and leisure as unique, but put us in the same basket as other businesses.”
As for the VAT cut gleefully announced by the Nation’s Favourite Politician Chancellor Rishi Sunak in July 2020, business owners like my husband feel it’s been little but a headline grabber – particularly since it only applies to food and not alcohol, a detail that escaped most of the populace and policy wonks alike. Given that there are around 60,000 bars and pubs in the UK that make around 95 per cent of their trade from booze, you can start to see why the discounts don’t add up.
Whatever the money proffered, it has barely touched the sides of most business’ biggest expense – rent. Meanwhile, too many landlords have played hardball and refused to reduce rent payments, despite shut-up venues having no income for months on end.
As Mike Kill explains, “In the hospitality sector, rent is between eight to ten per cent of annual turnover. Around 70 per cent of businesses are still in three quarters of rent arrears. So it’s one of the biggest issues we have. Meanwhile, a code of conduct advising landlords to play fair isn’t enough; it needs to be a code of conduct plus some sort of mandate like they have in Australia.” In the meantime, Kill says whenever there’s been a government announcement of financial support, venues have reported landlords getting on the phone to them right away, demanding rent.
And while the Government introduced a moratorium on business evictions in March 2020, which has been extended twice since, that provision runs out this March, 2021. With a gap between that and the uncertain May Day re-opening, many who have survived thus far could be out on the streets by Easter. Combine that with trade body UK Hospitality’s reckoning that half of hospitality businesses are saying they have insufficient cash to make it through to March in the first place, and a bleak picture of British streets punctuated with derelict pubs and bars begins to emerge.
Yet the argument hospitality venues may have significantly contributed to transmission rates is contested. Back in October, Public Health England figures showed that while educational settings and care homes were responsible for 27 and 26 per cent of transmission respectively, hospitality amounted to just 3 per cent. What has infuriated the drinks, restaurant and club sector has been the willingness of politicians, the media and even scientists to make seemingly snap judgements about their part in transmission rates.
Smaller venues have suffered the worst. Ryan Logan is General Manager of The Loch House Restaurant in Lochwinnoch, Renfrewshire, a family-owned and operated business, which has thrived for nearly 40 years – at least until the pandemic struck. Reflecting on the early closing hours brought in last summer, Logan says, “We serve around 80-100 people on a Monday from 12 noon until 10pm in October-November. Restricting the time we were allowed to open did not alter these numbers – we served the same number over a six-hour service. While all social distancing and protocols were being followed, the fact we had more people in than usual at any given time seemed entirely counterproductive to the science.”
In particular, the Government’s vacillation when it comes to policy around opening and closing hospitality venues during the pandemic has made a difficult situation more dangerous for staff and customers alike. The 10pm curfew, which saw bus stops and train stations crammed with revellers leaving venues in surging crowds, beggared belief back in the summer. It surely didn’t require scientific modelling to predict it would do nothing to assuage infection rates. But Ryan Logan feels this was inevitable: “It is an absolute dereliction of duty on the part of the Government that they haven’t even had the decency to consult with people within the sector,” something reiterated by Mike Kill: “Who are they speaking to about hospitality? It’s definitely not operators.”
For Graham Hindle, who runs the Woolpack pub in West Suffolk, there’s been some guidance from Greene King from whom he leases the property. But it’s been the devilish lack of instruction from the Government that has made life so difficult. “For a start the Government should have broadcast to the nation what to do when going into a pub. From people giving fake names, despite us recording track and trace by hand, to others claiming they’re from the same household when their driving licenses tell us another story, it’s been ridiculous. It’s just all so draining and it’s aged us.”
While Scotland released an £11 million fund to help nightclubs, Westminster has released nothing. Kill estimates only half of the UK’s nightclubs have survived
What’s more Hindle feels small local pubs like his have been sacrificed for political gain. “Matt Hancock’s constituency is just down the road from us, and this is a safe Tory seat. Our Covid numbers were the next lowest behind the Isle of Wight and Cornwall earlier last year. But then it was announced we’d be in Tier 2.”
And then there are the nightclubs, 1446 of them that have been shunned from Day One. Part of the problem, says Mike Kill, besides the fact that they are generally seen as creating social disorder and policing problems, is that the responsibility for them falls between two different government departments, the Department for Digital, Culture, Media and Sport and the Department for Business, Energy and Industrial Strategy. But it is also a matter of culture. “There’s always a tentative feeling that Conservative governments are always there to quash or control this poorer younger brother of the hospitality sector.”
While Scotland released an £11 million fund to help nightclubs, Westminster has released nothing. Kill estimates only half of the UK’s nightclubs have survived. While my husband was one of those who remained relatively upbeat about hospitality’s ability to bounce back earlier last year, he worries ministers will once again use the announcement of the reopening of venues as a mere headline to appease voters. He says, “I feel with hospitality they’ll lift some restrictions, but there’ll be others around spacing, seating and standing. It won’t be back to bars turning into dance floors. I can imagine there’ll be an 11 or 12pm curfew and for a long time we won’t go back to packed bars. But the Government will claim they have reopened the hospitality sector.”
To even reach that stage of operation, what the industry needs imminently is financial bridging support and a road map out. As Mike Kill explains, “At the moment no one can plan. We need a really simple map from the Government. It needs to correlate with the vaccination and the potential for a bridging financial package, plus the potential for rapid testing and pathogen reduction.”
Kill says many venues are even talking to local councils about the possibility of being used as vaccine centres. “If it’s the difference between being open in April versus June, we will do whatever it takes. And yet I can give them a thousand venues up and down the country but if they haven’t got the staff and the vials, there’s little we can do.”
The vaccine remains hospitality’s hope, as does progress being made with rapid testing.
But it remains to be seen whether the industry – and the late night sector in particular – can work in a socially-distanced manner. And then there’s the issue of a swathe of anti-vaxxing young, who would prefer to illegally rave and may never return to the club scene in the same way.
From Graham Hindle, it’s the profiteering that gets him down. “There needs to be controls on the costs of things like latex gloves and anti-bacterial products: they are three times as expensive as they were pre the crisis. And once the prices have gone up, they’ll stay up.”
But Kill is confident hospitality can be revived. “We speak to New Zealand and Australia all the time about how they’re doing – our industry will bounce back. But we are going to need to be back to 100 per cent capacity for it to work. In the meantime, it’s in the Government’s hands to get the vaccine out. And if we can help, we will.”
Nichi Hodgson is a broadcaster and author whose latest book is The Curious History of Dating: From Jane Austen to Tinder.