Hospitality Industry ‘Faces Thousands of Closures’

The hospitality industry has warned the new government restrictions around coronavirus could shut down firms.

Prime Minister Boris Johnson has urged everyone to avoid social contact and stay away from pubs and restaurants.

Kate Nicholls, chief executive of trade association Hospitality UK, said it was “catastrophic for businesses and jobs”.

“This announcement will lead to thousands of businesses closing their doors for good, and hundreds of thousands of job losses,” she said.

“Over the past few weeks the industry has suffered unprecedented drops in visits and many business are already on their knees. This latest advice leaves the industry in limbo, with no recourse to insurance.

“The government must act now to stop them going under and protect the people’s jobs.”

Chancellor Rishi Sunak is expected to outline a rescue package in the government’s daily briefing on the outbreak on Tuesday afternoon.

His £7bn Budget package to help businesses deal with the crisis included business rates relief and a new hardship fund, but Mr Sunak said in his Budget speech that he would “not hesitate to act” if more was needed.

Carolyn Fairbairn, head of the CBI business lobby group, called for co-ordinated, fast, interventions, and said: “We do not want to look back and say we acted too late.”

The chief executive of the Carluccio’s restaurant chain, Mark Jones, backed the calls for help, and said that the firm “was days away from large-scale closures” without state aid.

He told the BBC’s Today programme: “We understand the role we have to play in public health, so I won’t question the government’s advice on that. But to do that to an industry without any fiscal support whatsoever condemns us to death, effectively.”

Mr Jones added that the government restrictions announced last night meant “we’ll be in a situation where sales start to decline even more rapidly from today onwards”.

The Italian chain, made up of 73 restaurants across the UK and Ireland, has seen the largest declines in London, he said.

Many industry figures have expressed anger that the prime minister advised people to stay away from social venues while not forcing premises to close. This could have given them financial protection for interruption to their business.

However, most businesses do not have insurance cover to compensate them for coronavirus losses, according to the Association of British Insurers (ABI).

“Irrespective of whether or not the government order closure of a business, the vast majority of firms won’t have purchased cover that will enable them to claim on their insurance to compensate for their business being closed by the coronavirus,” the ABI said in a statement.

“Standard business interruption cover – the type the majority of businesses purchase – does not include forced closure by authorities as it is intended to respond to physical damage at the property which results in the business being unable to continue to trade.

“A small minority of typically larger firms might have purchased an extension to their cover for closure due to any infectious disease.

“In this instance an enforced closure could help them make the claim, but this will depend on the precise nature of the cover they have purchased so they should check with their insurer or broker to see if they are covered.”

Other UK firms that have been affected by new coronavirus containment measures include catering giant Compass Group.

It warned that its half-yearly operating profit would be lower than expected due to steps taken by governments in Europe and the United States. It now expects a loss of revenue of up to 30% across the business.

The devolved governments in Scotland, Wales and Northern Ireland have introduced measures to help businesses.