Scott Wright: Signs of hope for stricken hospitality trade

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PREMIUM

AS we move closer to the anniversary of the first national lockdown, with still no sign of the economy fully reopening, it is natural to cling on to signs of a return to normal life beyond coronavirus.

Such indications have been depressingly thin on the ground for Scotland’s hospitality industry, which has been among the hardest hit by restrictions introduced to curb infection rates. It has not been since before Christmas, after all, that bars and restaurants were able to welcome customers inside their premises, and even then, it was under heavily constrained conditions. Most of 2020, in fact, was lost to either lockdown or limited trading as the virus swept through the country.

However, while it would be wrong to suggest we are seeing green shoots of recovery in the hospitality industry, deals are being done by operators as they position themselves for the fuller reopening of the economy.

As reported in The last week, property agent Savills said the Glasgow market had been “surprisingly active” in recent months.

Director John Menzies emphasised that activity levels in 2020 were nowhere near what had been seen in 2019, for obvious reasons, but said there were signs of “occupiers taking a long term view of their trading prospects”.

And although rents will remain under pressure in the first half of this year, he added: “With the current positivity surrounding the vaccination programme, by the end of 2021 there could be a recovery in rents to approximately 75 per cent of pre-pandemic levels.”

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More evidence of long-term planning was later revealed in The with the news that TGI Friday’s, the US casual dining giant, had secured a prominent site in Glasgow city centre to roll-out its latest eating-out concept, the New York-inspired 63rd and 1st.

Encouragingly, property agent CDLH said it had found a tenant for the former Gusto restaurant on Bothwell Street within just eight weeks of instruction by the landlord, with six offers having been lodged. There certainly seems to be a feeling within the industry that now might be a good time to strike deals for premises.

Meanwhile, Marco Giannasi, owner of the popular Battlefield Rest bistro on the south side of the city, is pressing ahead with restoration works costing more than £100,000.

As we make our way wearily through what are hopefully the last days of lockdown, it is heartening to see businesses begin to make plans for better days. That nascent confidence will of course be linked to the success of the UK vaccine programme, which continues to represent our best bet for a life beyond endless restrictions.

But while there are small signs of confidence returning, at least in terms of operators planning for the future, it does not obscure the grave challenges that businesses in sectors such as hospitality, tourism and events face as they battle for survival.

Paul Waterson of the Scottish Licensed Trade Association

The furlough scheme continues to offer much-needed support, but it is not enough to cover the many overheads business owners face while they are unable to trade. It also should not be forgotten that, while it covers 80 per cent of the wages and salaries of furloughed workers (up to £2,500 a month), employers still have to make contributions to pensions and national insurance. It is also often forgotten that furloughed staff accrue holidays, which their employers have to account for.

Speaking on the Go Radio Business Show at the weekend, Paul Waterson, hospitality veteran and spokesman for the Scottish Licensed Trade Association, said the furlough system has been “very good”, but added it was important to remember that many operators have been denied grant support on account of the rateable value of their premises.

As revealed in The last year, if the rateable value of a business property was in excess of £51,000, which is the case for hundreds of pubs and restaurants, they did not qualify for grant support, even though it may not be classed as a large business. This is because of the controversial method of taking turnover into account when calculating rates bills for hospitality outlets, which has traditionally made them high for pubs, restaurants and hotels. Hospitality outlets in this position have latterly received one-off grants of £25,000 in the current lockdown.

“That was a mistake for us, and many people got nothing,” Mr Waterson said. “The Government have tried their best. It is a very difficult situation for them, balancing the needs of business with the need to control the pandemic.

“But we certainly need more if we want to see this out. We need an extension of the furlough, [and]we need an extension of the rates holiday.”

With furlough currently scheduled to close at the end of April, and only a three-month extension of business rates relief for the retail, hospitality, leisure and aviation sectors forthcoming so far, Mr Waterson is right to call for the extension of both schemes, especially given there is still no sign of a fuller reopening.

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Furthermore, even when restrictions begin to ease, the reopening will be gradual, and as such the support mechanisms should be tapered off to ensure businesses avoid that much-dreaded “cliff edge”.

Consideration should also be given by ministers to ongoing support for industries such as events. For while it is possible to imagine hospitality reopening with social distancing measures in place, the prospect of gigs resuming in intimate, crowded venues still seems remote.

That sad fact is evidenced by the growing number of bands and musical artists who are pushing tours and shows planned for this year into 2022. As an aside, even when artists are able to play before audiences again, they will have reams of red tape to wade through should they wish to play in the European Union because of post-Brexit visa rules.

This year’s Glastonbury Festival has already been postponed until next year, while there continues to be uncertainty over whether the Tokyo Olympic and Paralympic Games, currently scheduled to take place in July and August, will happen.

The risk to the broader night-time economy, including hotels, bars, restaurants and taxis, was captured in a tweet this week from Donald MacLeod, owner of the Garage and Cathouse nightclubs in Glasgow.

Outlining the “worrying” situation, he said that “everything is connected… if bands can’t or won’t play, venue(s) and clubs collapse, whole support infrastructure is decimated, as is hospitality and travel… night-time economy is destroyed.”

For so many businesses in Scotland, the stakes could not be higher.

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