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News & Press: General

Hospitality industry survey identifies gaps in business support

27 April 2020   (0 Comments)
Posted by: Chris Banks
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UKHospitality has revealed the results of the first comprehensive survey of the hospitality sector during the COVID-19 pandemic, in which businesses were asked about their experiences of accessing loans, insurance claims, the speed of grant payments and workforce issues.

The results have highlighted flaws in the level of support provided to businesses during the crisis. Around half (48%) of businesses have applied for loans, but the majority of those receiving a response (57%) have had their bids turned down. Government-imposed State Aid rules account for over a quarter (26%) of rejections, alongside banks telling business to exhaust their own capital first (28%).

Nearly three-quarters (74%) of businesses have claimed, or intend to claim, for business interruption insurance. However, their chances of success appear limited: alarmingly, fewer than 1% of businesses that have claimed have received pay-outs.

Only around a quarter of eligible businesses had received hospitality grants, which falls significantly short of Government estimates. UKHospitality has been urging for these loans to be expedited and extended to more businesses.

In terms of workforce, redundancies have been kept to a minimum (2%), with the majority of businesses furloughing staff, accounting for 84% of sector employees. This demonstrates the huge success of the Government’s job retention scheme, and the need for it to be extended as the recovery begins.

Kate Nicholls, UKHospitality CEO, commented: “These findings lay bare the extra work that needs to be done by governments, banks and landlords to make sure as many businesses as possible can survive this crisis. Hospitality was the first hit, the hardest hit and will suffer for the longest, and Government support needs to reflect these facts. Hospitality businesses will be key to recovery as prolific employers, major tax contributors, and hubs for social interaction.

“Governments across the UK have provided unprecedented support to assist hospitality through this crisis, and that is extremely welcome. Yet, we are in this for the long haul. Everyone is rightly looking to how the economy and the industry restarts in a way that avoids a return of this horrific pandemic. Before we get to recovery, we need to make sure that the support measures already announced are getting through to business.

“Loans must be fast-tracked with minimal restrictions, grants must flow to all businesses that need them regardless of size, and the job retention scheme must be amended to reflect actual earnings.”

ENDS

Notes to editors

Survey analysis

Responses and coverage

After data cleansing there were 378 responses analysed. This covered the operators of nearly 21,000 outlets employing over 370,000 people. Around 11% of industry businesses remain open mainly in the (takeaway) restaurant sector, contract catering and hotels. To put it another way nearly 90% of the entire sector is closed and the remainder is operating at substantially reduced levels.

Loans

  • 48% of hospitality businesses have applied for loans
  • Of those that have received a response 57% have been rejected
  • Those getting a response tend to have to wait over two weeks (54%) though some have received answers within 3 days (14%)
  • More than half (53%) of applicants were still waiting on a response
  • Main reason for rejection was having existing capital, followed by those assumed to be in difficulties under the State Aid rules
  • Anecdotal evidence of not lending to hospitality or new businesses

Ineligible for the

loan scheme on size

Unwilling to give

a personal guarantee

Bank judged the business

to have sufficient capital

Bank judged the business

to be 'in distress'

Bank unwilling to loan

for purpose of the loan

9%

19%

28%

26%

19%

 

Rent

 

  • There is a split between those that have paid rent (49%) and those that have had to miss payments for some properties
  • 43% of businesses have missed payments for all or most of their sites
  • Variety of sanctions listed but Statutory Demand is most common, followed by a reduction in the rent deposits
  • Many very positive experiences with landlord though a large cohort faced with deferral and incurring large debts

 

Grants

  • By the middle of April only a quarter (25%) of eligible properties had received their Government grant

 

Workforce

 

  • 84% of respondents’ workforce has been furloughed with redundancies kept to a minimum (2%)


The UKH member survey also asked questions regarding insurance claims and expectations for recovery timescales.


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