It is hardly surprising that research is showing that hospitality had the worst festive period in living memory – in fact, 2020 was the worst year ever. (I’m not sure we need research to work that one out!) But as we take stock on last year’s shutdown and the on going one – what is next?
Firstly, the trade organisations are working tirelessly on behalf of the licensed trade – all of the bodies from the Scottish Beer and Pub Association to the Scottish Hospitality Group, UKHospitality and the Scottish Tourism Alliance and SLTA are putting the case to everyone who will listen.
Rates is probably the biggest worry at the moment because if action is not taken by the Scottish Government to extend the Business Rates Holiday for the hospitality industry for another year, businesses across the country will be faced with paying rates based on 2016 figures. This would be enough to tip even the most successful operators over the edge. This needs to be addressed urgently if businesses and jobs are to be saved.
The other issue that operators are coming up against is Bank Covenants – or the potential breaking of them. Banks are requesting business plans to assess risk – but what operator can at this moment in time predict their level of business over the next 12 – 24 months? There should be moratorium on bank covenants for the next 12 months at the very least.
The continuation of the 5% VAT reduction for hospitality would also help. But the VAT reduction without the issue of rates being addressed is immaterial – because for many, many businesses, if rates are not addressed, they won’t be charging VAT because they won’t be in business.
Funding is still not coming fast enough and there will be a reckoning – I understand there are various Freedom of Information requests in to find out what has been paid out. Our First Minister tells us frequently that it has been allocated – I would prefer the term dispersed.
But some councils are certainly not going as fast as others when it comes to giving out the grants. Here’s hoping the vaccine roll-out is smoother than the Scottish grant roll-out.
What seems certain is that the current restrictions and ongoing restrictions are going to last well into the latter half of the year. Will we come out of the tier system this year? No doubt the organisers of the Climate Summit are hoping we will because if we don’t, it will not be going ahead!
Just to remind you
Tier 0 – Hospitality open and licensing times adhered to. Weddings and funerals limited to 50, eight people from three households can socialise inside and 15 from five households can meet outdoors.
Level 1 – Hospitality – Inside last entry 9.30pm closed 10.30pm. The rule of 6 applies, with weddings and funerals limited to 20. Same times for outside.
Level 2 – households can mix in hospitality but not at home. Inside, alcohol only can be served with a main meal. 7pm last entry. Outside, alcohol allowed – 9.30pm last entry, 10.30pm close.
Level 3 – no alcohol inside, 5pm last entry, 6pm closed. Outside, no alcohol.
Level 4 is the closure of all hospitality venues.
There is not likely to be a quick loosening of the tiers, despite the vaccine roll-out. Most people suggest that we may move out of lockdown mid-February if we are lucky. Then into Tier 4 in March – and perhaps by the end of March we may move into Tier 3… if we get lucky then maybe Tier 2 for Easter. But the jury is out on that. It all depends on the figures.
It has been suggested that the UK Government will move quicker. The Scottish Government is always more cautious.
However, the devil is in the detail. Tier 3 with the restrictions on opening hours makes opening not viable for most businesses in this tier. Some businesses can operate without alcohol but it makes no sense financially if they can’t do evening meals.
There has to be some flexibility from ScotGov to help hospitality get back on its feet. If that is trading hours, then it’s something.
But there are other issues not least for suppliers. The Scottish Government is pushing ahead with the Deposit Return Scheme – and wholesalers are having to bear the set-up costs of this scheme which is being imposed on them. We all know that wholesalers are not working on the biggest margins – and every trade business needs wholesalers to keep operating in order to have the supply there when it is needed. So right now, despite its green credentials, it really is not good news. It is due to come into play on 1st of July this year. Perhaps it is time that DRS was put back 12 months.
Remember, licensees will seen an impact cashflow too, with a deposit on all cans and bottles (single use drinks containers) of 20p required before you sell them – yes, you get the cash back, but when?
The only help suppliers have had is a £5m fund launched in December – which was open for only a week. It was targeted a food and drink wholesalers who had seen sales fall by 20% or more since March – most of the hospitality suppliers I know lost upwards of 90%… despite pivoting to sell to consumers.
