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Survey shows 'huge' cost of pandemic on tourism, lesiure & hospitality sector

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A survey on the impact of Covid-19 on the tourism, leisure and hospitality sector highlights the heavy cost of  lockdown and the impact it is having, even with the easing of regulation, enabling businesses to open, and reductions of social distancing rules.

“The true cost to the sector of this pandemic is going to be huge” said Chris Scargill (right) of MHA Larking Gowen, which has led the production of the survey results.

“This sector is facing challenges that nobody would ever have imagined and while some parts of the sector are in the early stages of re-opening, the vast majority are still hoping the potential date of 4 July is a reality, but it is accepted that any form of normality is way off and some parts of the sector are likely to be last to be released from lockdown.”

“There can be little doubt that COVID-19 is having a dramatic financial impact on the sector”, he added.  “The local impact has not been measured before, and the numbers are quite frightening. Extrapolate these results – which in themselves represent just over 4% of the direct economic impact of Norfolk and Suffolk – and the numbers become quite scary”.

The survey was facilitated by a group of local tourism leaders and included; Ian Russell, MBE of Wroxham Barns and Chairman of ‘Where to Go in North Norfolk’, and Director of Visit East Anglia; Chris Scargill of MHA Larking Gowen, Chartered Accountants and  Business Advisors; Dr Andy Wood, CEO of Adnams,  Chair of Visit East of England and a member of VisitEngland Advisory Board; Andrew Hird, Chair of Visit North Norfolk; Martin Dupee. Director of both, Norfolk & Suffolk Attractions and Visit East of England; Peter Williamson, Chair of Norfolk & Suffolk Tourist Attractions and Greg Munford, Chief Executive Director of Richardson's Boating Holidays and Holiday Parks and also President of British Marine.

The economic value of the sector to Norfolk and Suffolk is £5.4bn of which £3.83bn is direct revenue and employs approximately 120,000 people both directly and indirectly. The turnover of the businesses surveyed totalled £171.6m in 2019, and with investment and expansion those surveyed had initially forecasted 2020 turnover to be £189.2m but now they anticipate, even with June/July opening, that turnover would fall to £97m. If that informed value is extrapolated, then it would mean this sector alone could shrink by one-third (lost economic impact of £1.8 bn).

Those surveyed employed over 2,400 in the high season last year, but at the end of May less than 10% of that number were actually working. The partial furlough regulations will offer some respite, with 53% of businesses saying its introduction has helped stop some redundancies. The report also shows that some 20% of the workforce being seasonal and zero-hour labour and have therefore not been able to be on the furlough scheme.

The sector is keen to see further changes to the regulations, as with the current restrictions in place, as government furlough support reduces, and employer contributions start from 1 August (estimated to be 5% initially rising to 25% in October, when the current support system ends), businesses fear up to 22% of staff (518) could be made redundant between July and October alone.

“Even when they open, businesses will have to operate in a completely new way, with greatly reduced capacity and revenue, whilst working with expensive and challenging guidelines. Those businesses surveyed already anticipated spending over £160K to facilitate the re-opening.  A tough call when the expectations are that lost profits will exceed £26m” said Chris Scargill.  The redundancies are sadly inevitable if the level of business is not there, as there is no income to pay the staff. It is unsurprising therefore that 81% of business felt the sector needed a furlough scheme to see them through the winter. If nothing is done in this regard the simple fact is that some of the Government’s efforts to stop redundancies and keep jobs open will simply have been a deferral of the inevitable”.

One of the key players, party to the creation of the survey and the importance of this research, is Ian Russell MBE of Wroxham Barns and Chairman of Where to Go in North Norfolk. He said “the numbers involved in creating the economic value to the counties are of an unimaginably huge scale, and the sum of thousands of small mainly family owned businesses. These businesses are in it for the long term, they are resilient, loyal to their staff and have seen ups and downs over many decades, but nothing has prepared us for what is coming down the track over the next nine months.

In the absence of Government guidelines we have to assume our capacity will be reduced to circa 30%, resulting in a huge reduction in summer revenues. Like many attractions, we have been encouraged to weatherproof our visitor experience but those all important indoor spaces, playbarns and entertainment facilities will not be able to open.

The cold reality is that we (the sector) are on the floor, winded, bruised and running dangerously low on fuel. We are not in the shape we need to be to lead the economy back from the cliff edge. But being the optimists that we are, I believe that with some specific interventions we can fight back; we have the spirit, the self-belief and we have our loyal teams and communities on our side.”

Ian Russell concluded: ”to cut to the chase, this is what I believe we need to give us a fighting chance:

  1. Reduce VAT for Tourism, Leisure and Hospitality to 5% for the next 12 months
  2. Extend the flexible furlough scheme for Tourism, Leisure and Hospitality businesses until Spring 2021
  3. Extend CBILS payment terms to 10 years”

Andrew Hird, Chair of Visit North Norfolk said “I think we all have an understanding of some of the issues surrounding the individual elements covered by this survey, but by pulling them together it brings home the enormity of the issues facing the sector and its impact on the wider economy. This will affect so many people and so many livelihoods that have invested everything into the sector. Put simply, even with some reduced social distancing provisions, businesses will need extended help and support to retain staff and give them a fighting chance of surviving through to next April. The road to recovery is looking to be a long one.

Martin Dupee, Director of both, Norfolk & Suffolk Attractions and Visit East of England said “we know our local attractions have been working hard to open and operate safely but businesses face further financial hardship due to investment and management of those provisions,  outdoor catering can only be considered for so long. I am feeling sorry for the attractions with substantial indoor areas. I am confused why the High Street can open, yet walk through indoor attractions areas are being forced to remain closed”

Peter Williamson, Chair of Norfolk and Suffolk Tourist attractions added “We are really pleased with the support our members gave to the survey. They have entrusted their private and sensitive information to allow a further understanding of the numbers to be represented. The “three winters” scenario will put a significant number of businesses and jobs at risk.”

Greg Munford, Chief Executive Director of Richardson's Boating Holidays and Holiday Parks and also President of British Marine said “The future of Inland waterways hire companies is at risk, action needs to be taken to mitigate what is in affect three winters in one year. Boating operators have large costs in preparing for the season - these costs are already sunk. If action is not taken many operators may not survive”

Chris Scargill, Tourism Partner of MHA Larking Gowen concluded “The Government is making announcements all the time that affect the economy and this sector. We appreciate the support given to the survey, which needed a quick turnaround and I am grateful to all those in my team who have helped publish the data.”

If you would like a copy of the survey please contact This e-mail address is being protected from spambots. You need JavaScript enabled to view it or visit https://www.larking-gowen.co.uk/insights/news-tourism-covid-19-report-results-are-now-live/

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Last Updated ( Tuesday, 04 August 2020 07:13 )