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Fri 16th Oct 2020 - Friday Opinion
Subjects: More support needed to survive tiers torture, the shifting of tectonic plates, a decade of change in six months, smoothing the path of technology
Authors: Kate Nicholls, Paul Chase, Glynn Davis, Katy Moses

More support needed to survive tiers torture by Kate Nicholls

How far away the glorious days of August now seem. Eat Out To Help Out was filling pubs and restaurants, staycations were booming with the support of the VAT cut and our workforce was secure in their jobs. We had excelled in getting our venues ready for opening with hardly any notice and the public liked what they saw.

Of course, this masked serious problems – the pubs and restaurants that were too small to open under strict covid-secure guidelines, city centres that were all but deserted with large businesses hinting at a long-term move to working from home, international tourism dramatically down, the threat of a second wave – all on top of balance sheets that had been hammered for months. But there was cause for optimism.

Fast forward to today: the sector had a sluggish start to September before being battered with a raft of hurdles adding cost and putting off our customers. We could live with table service, mandatory Test and Trace, face coverings, though we could see our customers were suspicious and it put extra stress on our workforce. 

The rule of six clarified regulations slightly but the counterproductive and blunt imposition of the 10pm curfew was a hammer blow, drastically impacting trading ability for many, which was already curtailed by social-distancing protocols. Some of our customers decided that house parties and street drinking were an appealing alternative pursuit.

With barely a chance to take stock of the damage done by these measures (another 15% knocked off turnover, if you must know), we now have a new set of restrictions to deal with – the tiered system. We have worked with colleagues at the British Institute of Innkeeping and the British Beer & Pub Association to simplify these as best we can, and I’d advise anyone to download our guide and feed any extra questions through.

In essence: tier one (medium) enshrines the damage done in late September with curfew; tier two (high) adds the extra misery of banning households meeting each other inside hospitality venues, though they can brave the cold in their group of six outdoors; tier three (very high) enforces closure for pubs and bars that are not serving a “table” meal, and bans the sale of alcohol not taken with a meal. There will be plenty of food-led businesses pleading to be closed as footfall dries up and travel is “advised against”.

So, how does the sector survive? Through its pure doggedness, creativity and innovation mainly but, crucially, it must have more government support: restrictions must go hand-in-hand with meaningful financial support. 

We all know hospitality is about the people who make it happen. It’s time for our workforce to be supported again. Employees of eligible closed businesses in tier three will get 67% of their usual wage paid. But this must be opened up to workers in tier two where their employer chooses to close due to being crushed by restrictions and associated businesses in tier three that simply can’t operate.

For those businesses that can operate at reduced levels, we need government to look again at the Job Support Scheme (which is currently almost worthless for us in hospitality) and cancel any employer contribution for sector firms. Help us to protect our workforce.

And let’s remember that none of these jobs will exist if our businesses can’t survive. We have to get the message across that a closed business doesn’t stop facing costs – rent, suppliers’ bills, service contracts, utilities – it’s an endless list. We need grants to be reintroduced for all hospitality businesses – starting at 5% of rateable value per month for closed businesses and tapering down to 2% for tier one businesses.

It’s also time for government to signal there is hope in 2021 – extend the business rates holiday for a further year and keep VAT at 5% until next December.

Hospitality will come back fighting – and employing – but we need to survive a perilous winter ahead and have hope of a revival in 2021. Our businesses need the support that is both deserved and will generate a return – this was a sector producing £40bn of tax revenue for the public purse and it will again. The support provided to the sector by the Treasury thus far will be futile if the government does not come forward now with a package to safeguard jobs and businesses.

I urge the whole industry to unite and write to their MPs to get this message across – you can use our template letter available online. We just need to make sure everyone in government knows the vital role our sector continues to play. Myself and the UKHospitality team will continue the fight to ensure we get through this hard winter so we can survive and thrive again.
Kate Nicholls is chief executive of UKHospitality
UKHospitality is a Propel BeatTheVirus campaign member

The shifting of tectonic plates by Paul Chase

For five months, the Labour Party has played the classic role of the critic reluctant to become an author. Labour, under Sir Keir Starmer, has supported government measures to control the spread of covid-19 and then subsequently criticised them for failures of implementation. What has been lacking is a policy of their own that would distinguish them from the Tories. Until now. At last, the Labour opposition has a policy position of its own on the coronavirus pandemic. And it has chosen the wrong one.
Labour is now the party of national lock-down. And they seem to have public opinion on their side as poll after poll shows the public think government restrictions don’t go far enough. But then again, if you promise a lock-down backed by another wages furlough scheme that would enable the middle classes to have another couple of months sitting at home doing DIY, then what’s not to like? How might public opinion change if there was a realisation of how vastly expensive and unaffordable that is? A lock-down without getting money for nothing – that would be a different matter.
And so, the battle lines are drawn. On the face of it, Sir Keir has made a shrewd party-political calculation. A short, sharp, national lock-down lasting two to three weeks to reduce the infection rate appears to have public support. But even if you accept the logic of lock-downs, how can it be right to treat Cornwall, with an infection rate of 13 cases per 100,000, the same as Liverpool with an infection rate of 635 per 100,000? Hence the government’s “tier system”.
What is missing from both the government’s and the opposition’s policies is any kind of exit strategy. To say we’re going to play whac-a-mole for six months – but don’t worry, the cavalry is coming – in the shape of an effective vaccine is not a strategy, it is a hope. We are drifting into a never-ending series of stop-start regional lock-downs with no end in sight. But I sense the political tectonic plates may be shifting. It is clear the cabinet is split and so is the Tory party in parliament. The three-tier system is a political compromise between those who want another national lock-down – reportedly, including Michael Gove – and those who favour opening up the economy and focusing our attempts at protection on the elderly and vulnerable – supporters of which includes the chancellor, Rishi Sunak.
Sir Keir’s call for another national lock-down has upped the stakes. Will this polarise the parties with Labour becoming the “public health” party favouring lock-downs, and the Tories taking a more libertarian approach, championing the economy? I hope so, but I have my doubts. The 10pm curfew is a policy with few friends and precious little evidence behind it. Closing pubs and gyms altogether in tier three areas such as the Liverpool City Region, when they are clearly not major generators of infection, is a scapegoat policy designed to appease those who say something must be done – and this is “something”. 
When Johnson became prime minister, he ended the futile attempts by Theresa May to bridge the gap between Remainers and Brexiteers in parliament. He came very firmly down on one side of the fence. He needs to do so again in relation to covid-19. The first thing the government should do is present the public with the harsh economic truths about lock-down. A broadcast similar to the Patrick Vallance-Chris Whitty show, featuring a range of economic experts explaining the costs of all this would be a good start.
We then need the government to widen its group of scientific advisers beyond the lock-down junkies of public health and the groupthink they have engendered. We need to hear more from voices like professor Sunetra Gupta, the virologist and epidemiologist from Oxford University, whose patient dismantling in The Times of Matt Hancock’s misunderstanding of the concept of “herd immunity” provides us with a new way forward. The damage being done to the hospitality sector is tragic and irreversible. But a change of direction now from the government can stop if from getting much worse. It will take leadership. And possibly a change of leadership. At the very least, the hapless Hancock must go. Sunak seems to me a beacon of rationality whose voice needs to be heard. Even the World Health Organisation has now changed its position and said lock-downs don’t save lives they just reduce the velocity of infection without reducing the volume of it – pushing problems further down the line.
By changing strategy now, Boris could yet portray himself as the Santa who saved Christmas and consign Sir Keir to the role of the Grinch. It’s sad that our politics has come down to this kind of infantile calculation, but that’s what happens when leadership on both sides of the political divide is so utterly second rate.
Paul Chase is director of Chase Consultancy and a leading industry commentator on alcohol and health

A decade of change in six months By Glynn Davis

Taking my regular cycle route to the top of Alexandra Palace in north London recently it was impossible to miss an enormous stage being constructed on one of the car park spaces. It turned out to be set-up for a two-week run of Puccini’s La bohème by the English National Opera dubbed “ENO Drive & Live” that operated like a drive-in cinema but with a live opera performance. 
Like the rest of the leisure industry – even the ENO is on its uppers and experimenting. With the ability to only drive very limited revenues from its central London home, it devised this clever plan to generate money from paying customers showing up in their cars and for car-less opera buffs it had struck a deal with Uber whereby vehicles could be hired for the evening. But the key (cash generating) element in the plan was no doubt the recording of one of the performances for broadcast on Sky TV. 
Although such a move was very much driven by covid-19, it also plays into broad underlying trends. People are increasingly watching content such as films, theatre and opera at home. The virus has absolutely accelerated this but the appeal of streamed content and switching a trip to the cinema for one on the sofa at home instead was already gaining traction. 
Even with the ongoing torrent of bad news out there, the announcement that Cineworld had closed the doors to its 127 UK venues – possibly permanently – and that Vue was shutting a quarter of its sites midweek was a great shock. But maybe it should not have been. Between 2015 and 2019 revenue generated from global film releases rose 8% to $42bn but this was dwarfed by the rise of the home/mobile market that jumped 62% to almost $60bn, according to the Motion Picture Association. And the direction of travel was clear, judging by attendance numbers in 2019, which dropped 4.6%. 
Amid this turmoil, US activist investor Daniel Loeb with his Third Point hedge fund has jumped on to such structural changes and is pressuring Disney to move away from producing big theatrical films for box office release and, instead, further embrace the streaming of its content. He has likened the move away from cinemas to “horse-drawn carriages when the automobile was first introduced”. 
With covid-19, we are seeing a decade of change concentrated into a mere six-month time-frame. Clearly, the ramifications of this are enormous and also massively painful – especially when flip-flopping government enforcements seriously muddy the waters. It could be argued that even if a vaccine was developed and distributed tomorrow, the new direction of travel has already been set in motion. There is no going back to what we had back in early March, whether we like it or not.
Consider delivery. When people are enjoying their streamed content at home, what is most associated with this? It’s undeniably the home-delivered pizza. It’s clear to all that delivery is a major beneficiary of the acceleration in trends we are now seeing. The reality is that pre-covid-19, food delivery was a bit of a pain for many in the foodservice industry – it ate into margins and potentially cannibalised dine-in trade – but it quickly became a lifeline during lock-down and is now a vital component of most of these businesses.
It represents an ever more meaningful percentage of total turnover and any new physical unit (remember those) opening today will invariably have a delivery element factored into its location, design and operational practices. The industry’s wariness over dark kitchens has also receded somewhat and they are now looked on much more positively. This is indicative of a changing relationship. The reality is, we all need friends right now. We’ve moved on from what was an all-too-frequently confrontational situation and on to one where both parties are working more closely together to develop a mutually beneficial economic arrangement that also ultimately better services the end consumer. 
It really is stating the blindingly obvious that many areas of the leisure and hospitality industry have been upended by covid-19. Some of this represents significant structural change but much of it is not as obvious to identify as streaming and delivery at this early stage. It will, however, all become apparent. Certainly, the acceleration of the trends we are seeing will be massively difficult to deal with in the short term but what it is ushering in will, ultimately, describe the landscape in the long term.
Glynn Davis is a leading commentator on retail trends

Smoothing the path of technology by Katy Moses

I have a total of eight different hospitality apps on my phone. All downloaded and used to varying degrees (and degrees of success) during the past few months. It, therefore, came as no great surprise to me when KAM’s most recent research revealed that more than one in two customers are now getting a little peeved at having to download a new app each time they visit a new venue.
That’s not to suggest in any way that customers don’t increasingly want the option to order at table and view the menu and book a table, etc. In fact, these functionalities are all fast becoming an expectation for many. But with many new apps being launched to help on-trade operators navigate a contact-free reopening and adapt to post-lock-down government measures, tech providers and operators really need to work in harmony to ensure the experience is frictionless and painless for customers. 
KAM has just carried out some eye-opening research with our friends at OrderPay, showing that, without a doubt, customers are increasingly expecting (even demanding) a more technology-led experience, especially with regard to ordering and paying at their table on their own devices – as well as pre-ordering services. Some 41% of customers say that during the past six months, it has become more important to them that venues offer this option.
Consumers are more “information hungry” than ever as they remain “alert” to the potential risks from covid-19, and technology and digital channels can play a role in improving communication and reassuring customers. The research revealed, for example, 92% of consumers would like to see clear communication of safety measures via operators’ websites and apps. 

Tech-driven covid-prevention measures feature high on customers’ wish lists. Hospitality is currently re-inventing itself to do something that really goes against its very ethos; where the best operators always tried to maximise the contact points with their guests, many are now having to do exactly the opposite and trying to withdraw themselves and limit contact. I have no doubt that, in a number of ways, technology will form a large part of future service.
But actually, this desire for a technology-enhanced hospitality experiences isn’t new. Many customers, especially Generation Z, have been asking for this for a while. A phenomenal one in two customers think pubs and bars, in particular, are behind other leisure outlets and retail when it comes to their use of tech. Even before covid-19 hit, 43% of 18 to 34-year-olds had used an app to pay a bill in a pub or restaurant and 28% would have liked the ability to order and pay even before arriving at the venue. 
The research also found that two thirds of consumers find it frustrating when waiting to pay their bill at the end of a meal. A similar percentage of consumers often find it annoying when trying to split the bill with friends at the end of a meal. Covid or not, these are “stress points” in the customer journey that have been around for years. I’m not suggesting technology will take away all our troubles but, in a multitude of ways, it can certainly help minimise them. 
Obviously, technology is not just about directly improving customer experience either. All these new apps, track and trace, Wi-Fi, additional pre-bookings, increased web visits and guest feedback platforms are all critical ways to get to know your customers so much better (and not just the regulars.)
Many industry figures (and regular Propel contributors) have been banging the drum on the power of data for a while now. And it’s a drum that is very likely to be worth literally millions to many hospitality businesses.
If there is anything positive to come out of the past seven months for hospitality, it is this acceleration in the acceptance and use of technology and data to optimise the customer experience. I don’t think we’re exactly leading the way as an industry yet, but we’ve at least stepped into the ring and we’re ready to fight. 
If you’d like a copy of the (free) research, please get in touch –
Katy Moses is managing director at KAM Media
KAM Media is a Propel BeatTheVirus campaign member

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