Christmas is looking grim for the UK’s hospitality sector. This time last year, pubs, bars and restaurants were packed with Britons spending big on drinks, meals and nights out in the run up to 25 December.
This year, UKHospitality predicts that revenues for December will be down a whopping 70% – or £7.8bn across the sector – on December 2019 as venues struggle to make the festive season merry within the confines of the Covid-19 tier system.
In a bid to fix this, the government has offered a £1,000 grant to ‘wet pubs’ unable to open because they cannot offer a substantial meal, a move that has been widely derided by many in the sector.
Kate Nicholls, chief executive of UKHospitality says it “does not even count as a token gesture” as it amounts to just 1.1% of the average wet pub’s takings last December. She predicts a “bloodbath on our high streets” if the issue is not resolved.
So, what needs to happen to prevent a nightmare before Christmas and an administration horror show next year?
For Michael Kill, chief executive of the Night Time Industries Association (NTIA), venues such as nightclubs and music venues need two things from the government – an exit strategy and a cash injection. “They need enough money to get them through to the point where they can reopen and a resolution on commercial rents,” he tells Property Week. “And they need that immediately.”
Kill says the NTIA is also working with the government on rapid Covid-19 testing in venues to allow them to reopen, as well as a solution to the insurance issue, whereby venues are unable to insure events against the possibility of another Covid wave or lockdown.
Kill is concerned that if the government does not help night-time venues with these issues, January will be a car crash for the sector. “It’s just going to be catastrophic,” he says.
Eviction ban extension
UKHospitality is pitching a wishlist of solutions to the government. Top of that list is an extension to the ban on commercial evictions, which the government introduced in April to help retailers and hospitality businesses forced to shut down sites due to the pandemic.
It is calling for the ban, which was due to expire at the end of this year but on Wednesday was extended until the end of March, to be extended until June.
Landlords will be forced to sue people to pay them or they’ll go under
John James, Soho Estates
“Our concern is that [the latest extension to the eviction moratorium is] too short a stay of execution to force the hand of landlords that are so far unwilling to negotiate,” Nicholls told the FT on Wednesday.
UKHospitality is also calling for 50% of rent debt to be waived for periods when businesses were forced to close; the right for tenants to instigate a break clause to exit their contracts at the end of June 2021 and have half their rent debt written off; and a long-term commercial property review to address issues that hampered the sector pre-pandemic such as upward-only rent reviews.
However, not everyone agrees with UKHospitality’s approach. Soho Estates chief executive John James criticises it as too simplistic.
“I have waived rents, but I don’t think that’s what all landlords should do,” he says. “Everybody has got to cut the cloth according to their needs. If the government tells me I have to waive rent, what are they going to compensate me with? Or am I just the whipping boy?”
James also worries that the eviction ban extension could lead to lawsuits. “We at Soho Estates are not bothered about when the eviction moratorium ends, but other landlords don’t have that luxury,” he says. “They will either be forced to sue people to pay them or go under.”
James compares the government’s approach to a game of ‘pass the parcel’ in which the cost of lockdown is passed around until it ends up in the lap of the landlord. The problem, of course, is that if landlords start going bust, there will not be anyone left to pass the parcel to.