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The hospitality industry and coronavirus: insights from 4th July

Find out what challenges and changes the hospitality industry is facing following the easing of lockdown on 4th July.
The hospitality industry and coronavirus: insights from 4th July

Updated on 22/07/2020

All businesses across the UK have been impacted by coronavirus, either directly or indirectly, but the hospitality industry must be amongst the hardest-hit. With various countries banning international travel and lockdown measures forcing the closure of shops, the early stages of coronavirus proved highly disruptive and challenging both for smaller and larger businesses alike.

In reality, though, smaller businesses may face a higher risk of going out of business altogether during the crisis. This is typically due to having a lack of access to backup funds and smaller teams of employees, who now must look to reopen their businesses gradually while implementing sometimes costly and time-consuming safety practices for the public good.

Before we dive into exactly how different areas of hospitality are affected by the Government’s changes on the 4th July, let’s recap the changes themselves.

Viewing lockdown changes through a hospitality lens

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Amongst the general lockdown changes announced by the government on the 4th July are:

  • New social distancing regulations- people are being advised to keep ‘one-metre plus’ apart.
  • New cleaning requirements encourage more hygiene in the workplace; including increased hand washing and use of protective equipment.
  • Limitations on the amount of people allowed in a workspace are encouraged, meaning some companies may switch to rotational shift models.

It isn’t hard to imagine how some of these changes will impact businesses in general, but there’s an even larger list for changes affecting hospitality, for which you can read the government’s full guidelines for hospitality here. So let’s explore some of these changes and identify how they may affect businesses in the short-term.

How has hospitality been impacted by coronavirus?

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We’re going to take a look at the key sectors within hospitality to see how their operations have had to change to cope with lockdown demands, before exploring how the government’s 4th July changes to lockdown rules may impact success.

1. Food and Beverages

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Naturally, all shops selling food and beverages want their customers to feel safe and comfortable when they’re in-store and looking to make a purchase. Unfortunately, this simply wasn’t an option during the earlier stages of lockdown, given that non-essential shops were not allowed to open.

With this stricter version of lockdown lifted on the 4th July, food and beverage businesses could see themselves back in action; servicing customers in-store once again, but with a variety of safety measures in place to facilitate this.

The changes to lockdown could see the following:

  • Businesses may have to place limits on the amount of customers in-store.
  • Workers may have to socially distance, and wear PPE.
  • Hygiene and cleaning practices may have to be improved, including paying close attention to having proper ventilation in-store.

Fortunately, the easing of social distancing requirements from two metres down to ‘over one metre’ may make it easier for small businesses who do not have much space, to operate. Conversely, staff are now required to monitor the amount of customers in the shop so the extra work this entails could put a strain on smaller businesses - for example, in a coffee shop which normally is run by only two employees at a time.

How can food and beverage stores look to protect their profitability?

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One lockdown trend we’ve seen emerging amongst beverage shops in particular has been a shift to delivery services. By delivering, businesses can continue to sell to customers even if lockdown restrictions toughen up again, which may be a smart investment to make given the recent surge of cases in Leicester.

A lesser known tip for these businesses may be to evaluate and refine their delivery menus based on which items yield the highest gross profit. By focusing on highly profitable goods (e.g. coffee), and of course including the most popular products, businesses could position their delivery menus in a way that encourages healthy finances. Launching a ‘new delivery menu’ could even be a sales driver used as a part of marketing and advertising activity.

2. Travel, Tourism and Accommodation

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The media has covered the news of travel and tourism being shut down or strictly limited during the coronavirus outbreak in great detail. Things aren’t looking great for the sector at the moment with international tourism seeing a 22% drop in Q1 of 2020, and experts predicting declines of up to 60-80% over the course of the year. Consequently, there’s been a significant drop in the demand for accommodation, whether that means hotels, bed and breakfast’s, or camp sites.

As one of the hardest-hit sectors within hospitality, with flights being outright banned and tourism made illegal in many countries, it’s possible that the travel and tourism industry will see the most significant and immediate bounce-back as lockdown restrictions ease. Shifting from having no customers to accommodating some customers will likely spark some excitement.

As travel reopens, various forms of accommodation are likely to begin their recovery, too. There are already signs of this happening. Hospitality Net report that in China and the US, some larger hotel corporations are starting to see occupancy rates go above 50% for the first time in recent weeks, which is a positive indicator that this industry is on the mend.

One major challenge the travel industry faces is encouraging business travellers to start flying with them again. Business travellers are typically twice as profitable as leisure passengers, and some airlines see around 75% of their revenue come from this group.

With many workplaces switching to remote working models, though, airlines face the very real challenge of reassuring business travellers that flying is safe, and encouraging them to take to the skies again.

Could the 4th July changes boost these sectors in the short-term?

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The safety measures and one-metre social distancing rules announced for the 4th July could see these sectors gradually bringing back more and more of their operations.

One example of how significant the changes could be is in the ‘Bed and Breakfast’ space, whereby some of the biggest names in the accommodation sector, such as AirBnb, are likely to see customers returning as ‘staycations’ become legal. This is vital to many small hosts who own B’n’B’s and are desperately in need of the custom.

AirBnb took some extreme measures to support their network of hosts during coronavirus, such as covering a quarter of cancellation fees caused by lockdown and making an additional $10m relief fund available to their ‘super hosts’ through a grant scheme. If UK residents are able to travel for weekend breaks in rental properties, this could mean that the cash influx this brings may save many small businesses who have been struggling in the industry.

The challenge for property owners? To make customers feel as safe as they do in their own homes by implementing the right safety procedures and giving them flexibility around booking or cancelling trips. A good place to start could be by reading AirBnb’s own advice on how best to accommodate guests and put the right practices in place to make things as easy as possible for holiday-goers during these difficult times.

What factors should I consider as a business owner in the accommodation sector?

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While reading the government’s guidelines, it may be worth thinking about crowd density; are your customers packed in too tighly into your venue? Could they be at risk of breaching social distancing regulations through using shared or communal facilities?

Further considerations include customer movement; is it easy for customers to understand the one-way system you’ve implemented in your grounds or communal areas? Do you require residents to use PPE and do your communications make this clear to them?

If you haven’t yet made these considerations and put together an action plan, it may be worth carefully reading through the government’s guidelines to identify exactly what steps you need to take to keep your guests and employees safe.

4. Recreation

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For some businesses, it simply isn’t possible to operate while following social distancing rules to the T. This is true for many businesses within the recreation sector, such as spas, detox clinics and hydrotherapy venues. After all, a socially distanced massage probably isn’t the greatest of stress relievers.

With many of these types of businesses indicating to the government that they could be forced to close if no restrictions are altered to accompany their service offerings, the recovery of the recreation sector could well prove slow and painful.

How successfully businesses are able to operate under the 4th July lockdown changes could well be a determining factor in whether the government allows further changes which facilitate the successful reopening of many recreational businesses.

Hints of a brighter future for hospitality

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As we’ve highlighted in this article, it does look like the easing of lockdown restrictions is creating new opportunities for the hospitality sector to reboot its operations and start getting back into action.

We sincerely hope that any business owners affected by lockdown find success, either through seeking new opportunities for their businesses, being creative or more flexible with their offering,or through support schemes or networks, and that all customers are kept safe and well.

We have seen that lockdown measures can be implemented locally, and reactively, as cases of coronavirus spike in different regions, so it’s important that businesses have contingency plans in place to help protect themselves and their employees so that they can continue to operate throughout these challenging times.

How could Esme help?

These are difficult times for many businesses, so it’s important now more than ever, to take good care of yourself and your team. If you’re concerned about your business being impacted financially due to coronavirus, visit our advice page for information about how we may be able to support you.