In the hospitality and leisure sector, the operating landscape has changed beyond all recognition since Coronavirus (COVID-19) forced many businesses to close their doors to customers – some of them for good.
A long road to recovery
In a sector that lives and dies by discretionary spending, the lockdown has had a devastating impact: footfall has ground to a halt, sales have taken a serious hit, and many jobs have been lost along the way. At the same time, travel restrictions and quarantine measures have seen the prospect of peak-season revenue from foreign tourists effectively disappear overnight.
Against this turbulent backdrop, the government has thrown beleaguered businesses a much-needed lifeline via grants, rent holidays, reduced VAT, the “Eat Out to Help Out” scheme and job retention initiatives like the furlough scheme. Yet these challenging trading conditions are likely to continue for some time to come, with the UK potentially facing a further spike in COVID-19 and the risk of further lockdowns – and short-notice closures – at a local level. As a result, sector companies are digging in for an extended period of disruption before they even hope to return to ‘business as usual’.
From short-term survival to long-term sustainability
While government support has significantly improved the sector’s ability to weather the fallout of the pandemic, that support cannot last indefinitely. For the nation’s hard-hit hospitality and leisure businesses, the focus must now shift beyond getting safely through the crisis to ensuring their operating models are sustainable in a future that is likely to remain uncertain for many months ahead.
Yet businesses in this sector have several positive factors in their favour. Crucially, they have the overwhelming of the support of the nation’s consumers, who are keen to leave lockdown behind them and return to their previous lifestyles as soon as possible.
Flexible businesses have the power to adapt to the ‘new normal’
As the UK continues to ease out of lockdown, businesses that can successfully manage social distancing measures at their venues will be best placed to adapt to the ‘new normal’ going forward. For those with the vision to adopt more flexible ways of reducing their cost bases, generating new income streams and reaching new target audience, the COVID-19 crisis is creating some attractive opportunities.
For example, many restaurants have used this period of disruption to reinvent the way they run their businesses, implementing changes including maximising and repurposing their outdoor space, introducing smaller, more easily manageable menus and launching takeaway collection/delivery services. In the hotel industry, venues have received a welcome rebound in bookings as travel restrictions have fuelled the rise of the ‘staycation’, releasing some of the pent-up demand that built up during the lockdown.
Meanwhile, larger-capacity venues like museums are gearing to reopen their doors, albeit with dramatically reduced visitor numbers for some time to come. Additionally, venues like theatres may look very different in the future, as stringent social distancing requirements encourage businesses to explore the power of digital platforms to reach both existing and new audiences, and to replicate the live performance experience as closely as possible.
How we can help
Our hospitality and leisure sector group has extensive experience of working across a wide variety of assignments within the sector. This includes the sale of a leisure club, the accelerated sale of hotels, handling the administration of professional sporting clubs and restructuring restaurants, bars, pubs, and club businesses.
Have a look at our recent webinar where we discussed our thoughts on how we see the recovery of this sector playing out.
Simon Bonney and Carl Jackson have been named joint administrators to six companies each owning a separate hotel which were part of the Shepherd Cox Hotel brand.