This column is written for The Stray Ferret by Peter Banks, the Managing Director of Rudding Park Hotel and Spa and Chairman of Harrogate Hospitality and Tourism Association
“I opened my eyes and realised it was all a dream….”
How many of us wrote a story that finished like that when we were at primary school? I know I did and I still remember with toe curling embarrassment how proud I was…..
When I look back on the last three months it does feel “otherworldly”, the first half of March when we weren’t affected at all, but we could feel the menace creeping towards us, China, Italy, France, London, then us. Even the weather behaved itself, a beautiful spring. It almost felt like the Golden Summer of 1914 – the last hurrah before the world we knew was changed forever.
Sadly, this isn’t a dream, it is, to quote that dreadful new cliché, the new normal. This is now reality and we need to understand and manage it as well as possible.
Every day brings new challenges. If I can review a few of the most recent it will give you a feeling of a worms eye view from the sharp end of hospitality:
1.Track and Trace. The government has failed to create a system which tracks peoples movement. Therefore they have abdicated this responsibility to hospitality operators. We have to record everyone who comes into a pub or restaurant, contact details and time of arrival. I have had to introduce a “no track and trace, no beer” rule at our pub on the Holiday Park. Guests are very disgruntled at this invasion of their liberty, argue with us, abuse us and two guests even walked out as they “felt their rights were being threatened”. Please, it’s not our fault, we’re not being nosy, we are merely following the governments instructions and trying to help limit the spread of covid.
2. VAT reduction to 5% on accommodation and food in restaurants, cafes and pubs. On the surface a fantastic boost to the Hospitality industry as we will no longer be paying 20% tax on these items, just 5%. Why did Rishi take this sector specific action. The Government guidance states:
These changes are being brought in as an urgent response to the coronavirus (COVID-19) pandemic to support businesses severely affected by forced closures and social distancing measures.
I believe that he wanted to throw a lifeline to the Hospitality industry, however – how many of you, dear readers, are going to expect to have the discount passed on to you? From a straw poll I have taken – the vast majority of my guests will want a discount. Therefore this 15% VAT reduction does not help the Hospitality industry at all, we will have the same level of demand (just because it’s cheaper doesn’t mean that nervous people will go to the Pub), and we will merely pass 5% of a lower price onto the government. We will make exactly the same profit (or loss more likely!). So, a plea from me – if your local chippy has not dropped their price by £1.00, or your Hotel has not decreased your room rate by 15%, please don’t give the owner or manager a hard time.
Rishi deliberately made it sector specific to help that sector, not to put money in everyone’s pockets. If he’d wanted to do that he could merely have cut income tax or national insurance. I cannot state clearly enough, there will be many hospitality businesses that will not survive this winter, (today I heard that the iconic Yorke Arms is closing as a destination Restaurant). Please help them to keep as many staff employed as possible. Every time you ask for a discount you will be increasing the number of redundancies in that business.
You will still be paying the same price as before, It actually makes no difference to you. The government is just trying to ensure that the pub will still be open in April by allowing us to keep some more VAT.
3. £1000 for every furloughed worker still in employment on January 31 2021. This is a wonderful gift for many Hospitality operators who will need every scrap of financial help they can get next winter. However, what Rishi is asking us to do is continue employing a member of staff for the next six months rather than making redundancies and receive £1000 for taking that risk.
For a seriously damaged industry like hospitality that equation doesn’t stack up. Right now every operator that I know is making “clear, reasoned decisions to save as many jobs as possible”. That is a euphemism for having to make redundancies otherwise the business will not survive. Some sectors have increased profitability in this crisis, supermarkets, logistics, some manufacturing, yet they will also receive this boon. A sector specific extension to the Furlough scheme would have been better, the money could then have gone towards helping Hospitality through to next Spring when the good times will return (I hope!).
These examples are not dreams, they look fantastical, but they are reality. Six months ago 5% VAT on accommodation was laughable. These keep me and my fellow Hospitality leaders awake at night, trying to unscramble meanings and the future from our very cloudy crystal balls. We reopen Rudding Park Hotel (Accommodation and Restaurant only) on Monday 13th July and I pray that I have made the right decisions and chosen the correct path.
The great news is that we are open, we have taken advantage of all of the government schemes, I have a fantastic team who have supported me through every challenge and we will be up, fighting and winning next spring when the good times come back.
We have to accept that the rules and mores that we used to work to have changed absolutely, and only those businesses that change will survive. It doesn’t matter how big and powerful you are, If you do not change you will become extinct.
The past three months has undoubtedly been the biggest leadership challenge of my 35 year career. The world has been fundamentally changed, and in my darker moments I wonder if I will ever be the same leader as I was before. That innocence of early March feels like it happened to a different person.
To quote LP Hartley in “The Go-Between” – “The past is a foreign country; they do things differently there…”
We all look forward to welcoming you back to Rudding Park, and do what we enjoy, caring and looking after our guests. See you soon!
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