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 have 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 survey was facilitated by a group of local tourism leaders and included; Ian Russell, MBE of Wroxham Barns and Chairman of ‘Where to Go in North Norfolk’, and Director of Visit East Anglia; Chris Scargill of MHA Larking Gowen, Chartered Accountants and Business Advisors; Dr Andy Wood, CEO of Adnams, Chair of Visit East of England and a member of VisitEngland Advisory Board; Andrew Hird, Chair of Visit North Norfolk; Martin Dupee. Director of both, Norfolk & Suffolk Attractions and Visit East of England; Peter Williamson, Chair of Norfolk & Suffolk Tourist Attractions and Greg Munford, Chief Executive Director of Richardson’s Boating Holidays and Holiday Parks and also President of British Marine.
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. 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 ”to cut to the chase, this is what I believe we need to give us a fighting chance:
1. Reduce VAT for Tourism, Leisure and Hospitality to 5% for the next 12 months
2. Extend the flexible furlough scheme for Tourism, Leisure and Hospitality businesses until Spring 2021
3. Extend CBILS payment terms to 10 years”
Andrew Hird, Chair of Visit North Norfolk said “I think we all have an understanding of some of the issues surrounding the individual elements covered by this survey, but by pulling them together it brings home the enormity of the issues facing the sector and its impact on the wider economy. This will affect so many people and so many livelihoods that have invested everything into the sector. Put simply, even with some reduced social distancing provisions, businesses will need extended help and support to retain staff and give them a fighting chance of surviving through to next April. The road to recovery is looking to be a long one.”
Chris Scargill, Tourism Partner of MHA Larking Gowen concluded “The Government is making announcements all the time that affect the economy and this sector. We appreciate the support given to the survey, which needed a quick turnaround and I am grateful to all those in my team who have helped publish the data.”
If you would like a copy of the survey please contact firstname.lastname@example.org or visit https://www.larking-gowen.co.uk/insights/news-tourism-covid-19-report-results-are-now-live/
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