An insider look at the UK hospitality industry amid a crisis [interview]

Please note: This interview was conducted on 17 March 2020. Given the nature of the pandemic, information is changing on a daily basis. None of the content of this interview constitutes legal, medical or financial advice.

The hospitality industry has an amazing way of sticking together during any crisis and uncertain time. What we face now with the COVID-19 global pandemic is definitely one of those times, which is why I wanted to get an insider perspective on what is happening in the industry.

This week I took some time to chat with James Sharp MIH the General Manager at County Hotel Chelmsford about what challenges he is facing as a GM and the measures he has put in place to ensure the health of guests and staff while keeping his doors open.

What do you think will be the impact on the medium to large size-independent properties that don’t fit into the £51k bracket for government help?

The government relief for under £51K is really only covering B&Bs and very small properties as it goes by rateable value (RV), so an independent 50-bed hotel with no leisure facilities like ours, with an RV of £135k, is not even close to that figure. Even the larger properties need help and support during this time.

The government still needs to give grants to medium size businesses under £200k RV and look at a temporary basic wage from the government to all people. The problem is this is just going to add larger debts to businesses which will still have to be paid back. We don’t need a holiday, we need it to be wiped off to actually encourage business to continue. 

They also need to reduce VAT on accommodation to help start it back up and be in line with other countries.

January and February are never the strongest part of the season, and normally by March you start to get into it. This year, however, we started to feel the pain from the end of February:

When it comes to weddings, brides are so upset because they don’t have guests coming from overseas, some local members may have an illness, and elderly guests cannot attend – who doesn’t want their grandparent at their wedding? Even if the couple still wants the wedding to go ahead, it is still all down to the location, venue and suppliers.

Conferences are also being cancelled due to the recommendation to not have large gatherings of people, or because of where they are coming from. Travelling sales reps are also not going out to sell, so are not staying either.

Do you think the insurance companies should be assisting clients more as this is a worldwide pandemic that no one has encountered before?

Insurance! it’s all in the policy wording. We have a list of diseases and viruses that impact business, and as COVID-19 is a new name, that’s obviously not included. Some companies’ insurance policies don’t even cover existing known diseases and viruses.

According to the Department for Business, Energy & Industrial Strategy, "Businesses that have cover for both pandemics and government-ordered closure should be protected, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres, etc. is sufficient to make a claim."

Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.

What would be your advice to hoteliers out there that recently completed refurbishments or made investments, and now face cash flow shortages?

Manage day by day, look at staffing, business on the books (BOB) and possible cancellations. 

Some staff have come to us and said “We don’t need the hours, so give it to someone else or save the hours” – amazing support shown by the team!

Put off any further work, if you can.

Some of the things we are doing to lessen the impact of the coronavirus are:

• Talking to the bank, being open and recording all cancellations and doing comparisons against year over year (YOY)
• Forecasting what money we will need to get you through X period and Y period and so on
• Asking ourselves “What is our timeline? If we don’t get this by then, what will we need to do?”
• Being open with the team and getting them to help with ideas of how to save and reduce wasteful expenditure, and maximise any sales we do have
• Reviewing cancellation policies, and enforcing where we can – some people do have credit card/travel insurance, or we ask if they have travel cover included in their home policy
• Seeing if we can delay the booking so we still hold the cash, and the business just comes in later
• Maintaining and protecting rates – it will be a hard slog to get them back up if we reduce them too much
• Working on the staycation market – some people will still have the time off work and want to go somewhere

Are your staff still coming in to work? If so, how are they feeling about doing so and what measures have you put in place for their safety?

Yes, they are still coming in – we are supporting and educating. Our daily meeting includes the latest updates and what the team is doing. We are going to the local supermarkets in the morning to try and get first dibs on Dettol wipes for the offices.

Some of the things we are doing with our staff are:

• Ensuring that washing their hands is more of a priority and getting the duty managers to cover teams to allow them adequate time to wash their hands
• Going around the offices to also purify and sterilise the workspace
• Using the time to do deep cleaning, which is what we need and if I’m paying them, then they can crack on
• Team members are welcome to use holiday up if anyone wants it
• Checking contracts with the staff and looking at short term working (doing this now also means that if or when you need to implement it you are ready and know what you are contractually allowed to do)
• Swapping staff between different departments if needed and giving extra training where necessary
• Explaining that hand sanitisers are only for times when you don’t have running water and soap

The example I made to the team the other day was, if they had a raw breast of chicken in their hand and then used a hand sanitiser because it kills bacteria and viruses, would they lick their hand? Then I said if you washed your hands under warm water with soap and gave them a good scrub, are you more likely to lick your hand?

We are the 3rd largest sector with 3.2 million people in the industry in this country, and that’s a lot of low-income employees panicking about their jobs. Just £94 on statutory sick pay (SSP) does not pay the bills.

Mortgage holidays from the banks may be an option but what about renters? I’m sure the landlords will still want their payments.

It’s tough and the problem is that no one knows when this will end, but we must remain hopeful.

I saw a meme which sums us up:

I do listen to the professional advice that is being given and try to avoid the media trying to push for a headline, and I believe they are going in the right direction.

***

Huge thanks to James for taking the time to chat with me! I think that we also need to remember to try and keep as positive as possible, but, for anyone who is struggling, BBC News has a great article about How to protect your mental health.

As an industry, we will come back stronger as we never give up. As James told me:
“Don’t panic, Mr Mainwaring!”

For more information on what support the UK Government is providing for small businesses, see COVID-19: Support for business (released on 18th March), and for more information on COVID-19 in general, see the World Health Organization's resource page.