The hospitality and leisure sector has faced numerous challenges as a result of the coronavirus crisis – with shutdown, pivots, and furloughs affecting a huge number of businesses. Two Barclays industry experts outline the impact of the pandemic, the financial support available – and offer their thoughts on preparing for the ‘new normal’.
Many industries have faced drastic changes over the last months. But the sudden lockdown in March left most customer-facing hospitality and leisure businesses like hotels, restaurants, pubs, travel companies and leisure operators largely unable to trade.
“They have gone from getting ready for the busy part of the seasonal trend to a full shutdown with a direct message to close,” says Graham Austin, Head of SME for South West at Barclays. “Anything that’s got a potential for gathering has really been curtailed. There are no previous examples, certainly in our living memory, that would compare with this sort of impact.”
The sector is the third largest in the UK, representing approximately 10% of British GDP. While some restaurants have been able to pivot to takeaway service, and hotels have been permitted to provide accommodation to clients such as critical workers, non-UK residents who cannot travel and vulnerable people, many labour-intensive businesses have been forced to close and furlough staff.
We’re going to have a lot of new needs in the ‘new normal’, so it’s important to try and help businesses survive that period and help them deal with new challenges
Head of Hospitality and Leisure at Barclays Corporate Banking
But, in the long term, business owners are concerned about what the future has in store for discretionary spending. “Nobody knows what the new ground rules are likely to be,” says Mike Saul, Head of Hospitality and Leisure at Barclays Corporate Banking. Changing tourism trends and public confidence after lockdown are difficult to predict – and will have a significant impact on how these businesses will operate in the future.
The future of hospitality and leisure
Saul says the bank’s expertise will continue to be an essential resource, helping clients to establish new trading patterns.
“We’ve had a dedicated hospitality and leisure team since 1998, and that comes with an ability to talk to clients on equal terms. We’ve been able to act effectively as a partner, understanding their challenges, legislation, their wider business considerations and it’s allowed us to react appropriately and quickly to the needs of the industry as a whole.
“We’re going to have a lot of new needs in whatever the ‘new normal’ presents itself as, so it’s important to try and help businesses survive that period, and provide thought leadership to help them deal with new challenges.”
Getting ready to reopen
In the meantime, Austin says many businesses have taken a proactive approach: “I don’t think any of my hospitality and leisure customers are just sitting back and waiting. They’re using the opportunity to spring clean and get ready to go forward when they can – although when they can is out of their hands.”
Anything that’s got a potential for gathering has really been curtailed. There are no previous examples, certainly in our living memory, that would compare with this sort of impact
Head of SME for South West at Barclays
Austin advises ensuring that cash flow, HMRC and internal paperwork are in good order, checking trusted industry sources, as well as communicating effectively with staff, so that when businesses reopen, they can provide the best service possible.
While industry websites and guidance are helpful resources, he says it’s also essential to “look in the mirror as well as out the window”.
“Businesses should look at their own website to make sure they are communicating well with anyone who’s looking to make an enquiry. Are they ready to reopen and are they ready to take their share back of the market, when they can?”
Saul adds that clients should make sure that any new plans adhere to government guidelines, when they are released:
“We will be seeking a continuation of our partnership approach – we don’t expect business plans to be fixed for the next 12 months. We expect to work with clients in a dynamic and progressive way to help them get to normal trading.”
GOGOs Waterfront Restaurant
GOGOs Waterfront Restaurant has a strong reputation with local customers in Windsor – but owners Greg and Gail Orlandini became concerned about the impact of the coronavirus crisis on their business in early March.
Relationship Director Mandeep Bibra initially arranged a temporary overdraft increase to help with salary payments – and when lockdown forced the restaurant to close, facilitated a CBIL loan to support cash flow.
Greg Orlandini said: “When coronavirus hit, it hit hard and fast. The CBILS funding has meant we don’t have to close our doors permanently and, when the time is right, we can hit the ground running and reopen again.
“The support and experience received from Barclays and our business relationship manager, has been one of a true banking partnership. Having that personal contact and someone helping us each step of the way has been wonderful.”
The Greyhound Inn and Hotel
Like many hospitality businesses, The Greyhound Inn and Hotel, near Usk in south east Wales, was left in a precarious position when the coronavirus pandemic hit at the start of the venue's busy spring season.
"Suddenly all our income disappeared overnight," said Owner Kelly Jolliffe. But she was able to breathe a little easier after she secured a Bounce Back Loan of £50,000 from Barclays.
"The loan has helped us ensure supplier relationships are maintained as well as helping us pay our staff and creditors. I think it’s important during this difficult time to make sure our whole supply chain stays on their feet," says Jolliffe.
"As well as honouring our payment terms, it means we will all be better placed for when the time comes to re-boot our business after the crisis."
Jolliffe said the "understanding and sincere interest in our business" of her Barclays Business Manager, Debra Reader "made all the difference when we needed this urgent support" – allowing The Greyhound Inn and Hotel to access loan funds within 24 hours.
"The loan is critical in getting us through this period which, like most businesses, put enormous strain on our cash flow. More than anything the loan allows us to prepare for the reopening and to trade instantly."
For her part, Reader says her team has worked hard to get to know the venue. She adds: "When the Greyhound Inn was impacted, our understanding of the business and our relationship with its owners made a huge difference. The new facility will secure jobs within the local community and provide vital liquidity to the business.”