The hospitality sector needs cash, clarity and confidence or chaos will ensue

By Nick Weir, Co-Managing director of Shelley Sandzer Professional Services

Published by CoStar, February 22, 2021

Once again, we are standing on a precipice.  This time, however, the drop is even greater.  While we wait to see what ‘data not dates’ really means, the re-opening roadmap is just one part of what the industry needs.  Cash, clarity and confidence are what everyone is calling for, not soundbites, kite flying and misinformation.

All commentators and operators in the hospitality industry are now becoming increasingly frustrated at the lack of guidance on the date lockdown will be lifted and pubs and restaurants will be allowed to re-open. 

Various dates have been bandied about and leaked in the media.  Will it be early May, per the latest leak, or perhaps later in the summer?  Will holiday accommodation open, meaning domestic tourism will receive a boost.  Will offices be able to re-open any time soon, helping to bring the lifeblood back into cities?  Someone may know, but they need to stop keeping it a secret as this uncertainty is adding more misery to the situation.  It is about time some real clarity on re-opening timings is given. 

All businesses are suffering severe cash burn, both small businesses and at the corporate level.  So far it is clear the financial assistance provided is simply not enough.  There will be casualties, we know that, but the longer this lack of clarity from the government on re-opening the sector continues the more severe the cash burn is, and the more likely there will be mass casualties.  There is now a strong possibility we will see a bloodbath.

In addition to the lack of clarity on timing and cash concerns, the elephant in the room is the expiry of the moratorium against evictions of tenants for non-payment of rent and the debt mountain. According to UK Hospitality, almost £2bn of debt has been accumulated, cash is running out and some landlords are not providing any rent concessions despite the forced closures imposed.  The fear is thousands of units may simply never re-open.  More cash is needed, now.

What we need to see is some kind of roadmap so the scenario planning in the sector is modelled in more certain terms and operators can look ahead with confidence that they can re-open in the best possible shape.  Waiting until March for guidance in the Chancellor’s budget is far too late. 

We are now approaching the cliff edge, we urgently need clarity on re-opening and guidance on the worrying moratorium issue.  We need cash and that will give a timely confidence boost to the battered sector.

Failing these three vital Cs, we face absolute chaos.