Hospitality sector calls for business rates reform

Hospitality sector calls for business rates reform

Introduction

In the Government’s recent Business Rates Revaluation Consultation, UKHospitality along with the British Institute of Innkeepers called for a wide-ranging reform of the current system. The Government’s consultation has confirmed that business rates revaluations will now occur every three years instead of five which has been supported by hospitality trade bodies. However, hospitality trade bodies have also said that this cannot come at the cost of additional reporting, restrictions on appeals, and penalties’. Hospitality trade bodies have said that they appreciate the usefulness of the Government’s consultation. But they feel that there needs to be a wider reform to address the unjust and imbalanced system with a need to move taxation away from property.

 

Why do trade bodies want a reform?

In the current system, the hospitality sector overpays by 300% relative to its turnover which amounts to £2.4bn. Understandably, the hospitality sector believes this is particularly unfair considering the effect the pandemic has had on hospitality businesses. This has piled up the pressure on indebted businesses as they start to rebuild after being closed for the majority of the last 16 months. The fact that they are overpaying on their business rates certainty doesn’t help.

Hospitality trade bodies have expressed a number of concerns about the proposals in the consultation which would increase the administrative burden on hospitality businesses. They believe a broader review is needed to redesign the business rates system to reduce the administrative burden and not increase it.

Hospitality trade bodies propose that businesses should not be asked for any additional information than they currently do in the revaluation process particularly as they will now be more frequent. Furthermore, they believe that the Valuation Office Agency should improve its technological systems to help with data returns.

 

How can we help?

At Hawsons we have a dedicated team of leisure and hospitality accountants at our offices in Sheffield, Doncaster, and Northampton.

As the sector continues to become ever more challenging, with changes in the fierce global, nation, and regional competition leading to unrelenting pressures to maintain margins, it is more crucial than ever to seek sound and proactive advice.

At Hawsons our dedicated team of specialist hotel, pub and restaurant accountants offer professionals advice and guidance that is tailored to their individual needs and requirements, providing a full range of proactive services.

Free initial consultation

Richard Burkimsher

Richard Burkimsher

Partner, Northampton

01604 645 600

[email protected]

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The Government introduce an insurance scheme for events

The Government introduce an insurance scheme for events

The Government and Lloyds have partnered together to introduce the Live Events Reinsurance Scheme. The purpose of this scheme is to provide support for live events in the UK that are available to the general public. For example, this would include:

  • Music festivals
  • Business events
  • Theatre performances
  • Comedy events

 

The scheme will cover costs incurred from events that are legally obliged to cancel due to Government Covid restrictions. In this scheme, the Government will act as the ‘reinsurer’ as they will step in and guarantee that insurers can offer the products that events companies need. The scheme will be available from September 2021 and will end at the end of September 2022.

 

What does this mean for the events industry?

The introduction of this insurance scheme will allow the events industry to start planning events without having to worry about the event being cancelled at a later date if the government reinforces Covid-19 restrictions. In turn, more event organisers will have the confidence to start event planning which will bring more money into the UK economy.

Industry experts have welcomed the news of this new insurance scheme, however, some have questioned the timing of the introduction and asked why the scheme wasn’t introduced earlier.

 

How can we help?

Hawsons has a dedicated team of specialist leisure and hospitality accountants in Sheffield, Doncaster, and Northampton.

As the sector continues to become ever more challenging, with changes in fierce global, national and regional competition leading to unrelenting pressures to maintain margins, it is more crucial than ever to seek sound and proactive advice.

At Hawsons our dedicated team offer professionals advice and guidance that is tailored to our clients individual needs and requirements, providing a full range of proactive services.

Free initial consultation

Richard Burkimsher

Richard Burkimsher

Partner, Northampton

01604 645 600

[email protected]

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Expected recovery date for eating out market in doubt

Expected recovery date for eating out market in doubt

Recent research conducted by Lumina Intelligence has found that the UK eating out market was expected to make a full recovery by the end of 2022. By the end of 2021 the UK eating out market was expected to grow by 33.4% to £63.6bn and expected to continue growing by the end of 2022 to £91.9bn just over the pre-pandemic levels of £91.3bn. This data has been based upon all restrictions coming to an end on 21st June. However, it has now been confirmed that the current COVID restrictions will be extended a further four weeks which is likely to have a significant effect on the recovery of the eating out market.

 

Could the UK hospitality sector suffer from long economic COVID?

There are concerns that the hospitality sector will suffer from long economic COVID which are likely to be emphasised due to the extension of COVID-19 restrictions across England. The UK Hospitality chief executive, Kate Nicholls, gave a speech in the House of Commons on 7 June which highlighted the impact that forced closure and strict trading conditions was having on the hospitality sector. According to Nicholls’s evidence, only 40% of hospitality businesses are currently able to operate profitably.

The average monthly costs of running a hospitality business are between £10,000 – £20,000 whilst average government support is £3,000 per month. This has left hospitality businesses with average deficits of £7,000 to £17,000 per month which has contributed to the industry’s rental debt exceeding £2bn. Nicholls has called for landlords to split the debt with businesses and write off 50% of rent debt for periods of forced closure.

Following the news of the extended restrictions the government will most likely be under pressure from business leaders in the hospitality sector to deliver further financial support.

 

Conclusion

To conclude, the extension of the COVID-19 restrictions across England has put the expected recovery of the eating out market on hold. This means that hospitality businesses will face at least a further four weeks of strict trading conditions. This decision by the Government will put them under more pressure to deliver further financial support to the hospitality sector with some unable to trade profitability in strict trading conditions.

How can we help?

At Hawsons we have a dedicated team of leisure and hospitality accountants at our offices in Sheffield, Doncaster, and Northampton. 

As the sector continues to become ever more challenging, with changes in fierce global, nation and regional competition leading to unrelenting pressures to maintain margins, it is more crucial than ever to seek sound and proactive advice.

Free initial consultation

Richard Burkimsher

Richard Burkimsher

Partner, Northampton

01604 645 600

[email protected]

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Hospitality businesses increase menu prices

Hospitality businesses increase menu prices

The pandemic has forced the hospitality sector to close its doors for the best part of 12 months. These periods of closure have caused rising levels of debt and along with the pressure of increased costs have resulted in many businesses increasing their customer prices.

A recent survey of business leaders has revealed that 48% of pub, restaurant, and QSR sectors have raised their prices since reopening to protect the future of their business.

The main reasons why many hospitality businesses are doing this are:

  • Supply issues
  • Social distancing measures affecting profits
  • Customer’s not showing up for bookings

 

Supply issues

Since outdoor trading began on 12 April 2021, 63% of survey respondents said they have experienced some supply issues.

 

Social distancing

21% of those surveyed believed that the social distancing measures currently in place will result in them making a loss because this impacts the number of covers they are able to offer. 44% of those surveyed believe they will start to make a profit from 17th May 2021 when restrictions start to ease.

 

Customers not showing up for bookings

Customers not showing up for bookings continue to be a major issue for the hospitality industry, especially when bookings are essential during the pandemic in order to get a table. The latest research from the CGA found 8% of consumers have admitted to not showing up for bookings. The actual number is likely to be significantly higher. This is resulting in many hospitality businesses losing money. However, this a very difficult issue to solve and businesses may need to think of different ways to minimise the level of no-shows and to make it easier for customers to cancel reservations so they can reallocate the space.

 

UK Hospitality suggest more targeted loan system to the Treasury

UK Hospitality has suggested in a letter to the Treasury that they should work together in order to develop a more targeted loan system that recognises the unique issues the hospitality sector face as we move ever closer to the end of the pandemic. This is because banks are denying many hospitality businesses access to the critical loans they need in order to get back on their feet.

The hospitality sector is ready to help the economic recovery and will boost employment levels over the coming months. However, many hospitality businesses have significant debt including back rent and other business costs. Access to capital is essential to help them recover as quickly as possible.

 

Conclusion

To conclude, many hospitality businesses have been forced to increase customer prices in order to increase profit and hopefully safeguard the future of their business. Ongoing issues include supply issues, COVID restrictions limiting customer numbers, recruitment difficulties, and customers not showing up for bookings.

With many hospitality businesses requiring further support, UK Hospitality has proposed developing a targeted loan system to ensure the hospitality sector can recover to full strength.

 

How can we help?

At Hawsons we have a dedicated team of leisure and hospitality accountants at our offices in Sheffield, Doncaster, and Northampton. As the sector continues to become ever more challenging, with changes in fierce global, nation and regional competition leading to unrelenting pressures to maintain margins, it is more crucial than ever to seek sound and proactive advice.

Free initial consultation

Richard Burkimsher

Richard Burkimsher

Partner, Northampton

01604 645 600

[email protected]

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Is Technology Improving Customers’ Hospitality Experiences?

Is Technology Improving Customers’ Hospitality Experiences?

Introduction

In order to minimise physical contact, technology has become more commonly used in the hospitality sector, but does technology improve the overall customer experience?

 

How does technology improve the customers’ hospitality experience?

Recent research by Zonal and CGA has found that 40% of consumers believe that technology has improved the hospitality experience. The top three benefits that consumers rate the highest are as follows:

  • Speed and convenience (31%)
  • Ease of ordering (29%)
  • Tracking orders (17%)

Technology seems to remove a lot of the pain points that customers experience for example, struggling to attract the attention of the server, items not being on the menu, and feeling pressured to order quickly. Implementing a digital ordering process not only improves the customer experience. It also frees up the server’s time so they can spend more time with guests answering their queries.

Technology can also remove another pain point. Paying the bill! Especially if the bill is being split between a number of people. This can be particularly frustrating. However, advances in technology means there are wide range of choices when paying the bill to make it easier.

 

Disadvantages of technology in hospitality?

One of the main disadvantages of technology in hospitality for the wider economy is the potential impact on employment levels in the sector. This may be counterbalanced by the impact of Brexit and a reduction in the available work force.

Implementing technology into a business also increases the risk of exposure to cybercrime. This is of particular concern as many hospitality businesses will be storing customers personal data on their networks and are subject to data protection requirements.

 

Conclusion

To conclude, technology has many positives in the hospitality sector and improves the customer experience in a number of ways. There are issues for the sector to address including understanding the impact on required employee numbers, a resulting pressure on labour costs in the future caused by demand in other sectors and increases in the national minimum wage, a commitment to IT training and changes to systems and procedures to minimise the risk of cyber security issues and non-compliance with regulations.

 

How can we help?

At Hawsons we have a dedicated team of leisure and hospitality accountants at our offices in Sheffield, Doncaster and Northampton. As the sector continues to become ever more challenging, with changes in fierce global, nation and regional competition leading to unrelenting pressures to maintain margins, it is more crucial than ever to seek sound and proactive advice.

Free initial consultation

Richard Burkimsher

Richard Burkimsher

Partner, Northampton

01604 645 600

[email protected]

COVID-19 rent proposals for the Leisure & Hospitality sector

COVID-19 rent proposals for the Leisure & Hospitality sector

Over the past couple of weeks, a number of property and leisure operators have put forward proposals for the UK Government to support rental payments. A number of bodies have proposed a furlough-style system where the government would pay 80% of the rent for businesses forced to close during the lockdown. This would be known as the Furloughed Space Grant System (FSGS) scheme. A similar scheme has been implemented in Denmark.

A group of food & beverage operators has proposed a #nationaltimeout or #nationalrentfree to support rental payments. This proposal would see the Government ensure that hospitality and leisure tenants get nine months rent-free until the end of 2021. This proposal would also see landlords receive relief on interest payments and loan covenants.

 

Pros and cons

The FSGS scheme has the advantage of being based upon an existing scheme (furlough scheme) and can be time-limited which would appeal more to the Government. However, this would cost the treasury billions and there would need to be very complex requirements to justify which businesses are eligible for the grants, which would entail a lot of administration.

The #nationaltimeout proposal would not cost the government anything (in theory). However, this proposal would require the Government to agree on numerous lease and loan agreements over a long period of time. Furthermore, going down this road could have a huge longer-term impact on banks and other investors. Other sectors may also demand similar help if the leisure and hospitality sector was granted this support.

 

Government focus on reopening after lockdown

It is clear to see that the Government is now focusing on how they can reopen businesses after the lockdown. With the Government planning to end lockdown restrictions on 21 June, introducing any new schemes will prove to be an interesting challenge.

 

How can we help?

At Hawsons we have a dedicated team of leisure and hospitality accountants at our offices in Sheffield, Doncaster, and Northampton. As the sector continues to become ever more challenging, with changes in fierce global, nation and regional competition leading to unrelenting pressures to maintain margins, it is more crucial than ever to seek sound and proactive advice.

Please get in touch with Richard Burkimsher on 01604 645600 or email [email protected] for more information or help.

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Richard Burkimsher

Richard Burkimsher

Partner, Northampton

01604 645 600

[email protected]