Contributed by MHA Larking Gowen
23/06/2020 - MHA Larking Gowen
A new survey on the impact of COVID-19 for the Tourism, Leisure and hospitality sector indicates the significant financial consequences of lockdown and the ongoing impact it is having, even with the easing of regulation, enabling businesses to at long last open, and longed for reductions of the social distancing rules.
“The true cost to the sector of this pandemic is going to be huge” said Chris Scargill of MHA Larking Gowen, who has led the production of the survey results.
“This sector is facing challenges that nobody would ever have imagined and while some parts of the sector are in the early stages of re-opening, the vast majority are still hoping the potential date of 4 July is a reality, but it is accepted that any form of normality is way off and some parts of the sector are likely to be last to be released from lockdown.”
“There can be little doubt that COVID-19 is having a dramatic financial impact on the sector”, he added. “The local impact has not been measured before, and the numbers are quite frightening. Extrapolate these results – which in themselves represent just over 4% of the direct economic impact of Norfolk and Suffolk – and the numbers become quite scary”.
The economic value of the sector to Norfolk and Suffolk is £5.4bn of which £3.83bn is direct revenue and employs approximately 120,000 people both directly and indirectly. The turnover of the businesses surveyed totalled £171.6m in 2019, and with investment and expansion those surveyed had initially forecasted 2020 turnover to be £189.2m but now they anticipate, even with June/July opening, that turnover would fall to £97m. If that informed value is extrapolated, then it would mean this sector alone could shrink by one-third (lost economic impact of £1.8 bn).
Those surveyed employed over 2,400 in the high season last year, but at the end of May less than 10% of that number were actually working. The partial furlough regulations will offer some respite, with 53% of businesses saying its introduction has helped stop some redundancies. The report also shows that some 20% of the workforce being seasonal and zero-hour labour and have therefore not been able to be on the furlough scheme.
The sector is keen to see further changes to the regulations, as with the current restrictions in place, as government furlough support reduces, and employer contributions start from 1 August (estimated to be 5% initially rising to 25% in October, when the current support system ends), businesses fear up to 22% of staff (518) could be made redundant between July and October alone.
“Even when they open, businesses will have to operate in a completely new way, with greatly reduced capacity and revenue, whilst working with expensive and challenging guidelines. Those businesses surveyed already anticipated spending over £160K to facilitate the re-opening. A tough call when the expectations are that lost profits will exceed £26m” said Chris Scargill. The redundancies are sadly inevitable if the level of business is not there, as there is no income to pay the staff. It is unsurprising therefore that 81% of business felt the sector needed a furlough scheme to see them through the winter. If nothing is done in this regard the simple fact is that some of the Government’s efforts to stop redundancies and keep jobs open will simply have been a deferral of the inevitable”.
One of the key players, party to the creation of the survey and the importance of this research, is Ian Russell MBE of Wroxham Barns and Chairman of Where to Go in North Norfolk. He said “the numbers involved in creating the economic value to the counties are of an unimaginably huge scale, and the sum of thousands of small mainly family owned businesses. These businesses are in it for the long term, they are resilient, loyal to their staff and have seen ups and downs over many decades, but nothing has prepared us for what is coming down the track over the next nine months.
In the absence of Government guidelines we have to assume our capacity will be reduced to circa 30%, resulting in a huge reduction in summer revenues. Like many attractions, we have been encouraged to weatherproof our visitor experience but those all important indoor spaces, playbarns and entertainment facilities will not be able to open.
The cold reality is that we (the sector) are on the floor, winded, bruised and running dangerously low on fuel. We are not in the shape we need to be to lead the economy back from the cliff edge. But being the optimists that we are, I believe that with some specific interventions we can fight back; we have the spirit, the self-belief and we have our loyal teams and communities on our side.”
Ian Russell concluded: ”to cut to the chase, this is what I believe we need to give us a fighting chance:
If you would like a copy of the survey please contact email@example.com or visit https://www.larking-gowen.co.uk/insights/news-tourism-covid-19-report-results-are-now-live/
All articles on this news site are submitted by registered contributors of SuffolkWire. Find out how to subscribe and submit your stories here »