Opinion

Hospitality and leisure: Top three tips for businesses to prepare for a staycation

Published: 29th July 2020
Area: Corporate Restructuring & Insolvency

Hospitality and leisure: Top three tips for businesses to prepare for a staycation

Thanks to COVID-19, 2020 is looking to be the year of the ‘staycation’ for many British holidaymakers.

Although not necessarily good news for our tans, it is positive for the UK hospitality and leisure sector. However, in order to capitalise on this demand, companies should ensure they are prepared. Numerous operational changes will potentially need to be made, from restructuring to supplier and contract negotiations.

So, how can businesses take advantage of this rise in footfall? Here we outline three things businesses should do to prepare for a staycation.

1. Talk to your landlord

Rental costs are a large part of a company’s outgoings, especially in the hospitality and leisure sector. In order to survive COVID-19, landlords and tenants need to communicate better than ever, adapting the way they operate.

Where lockdown has slowed cashflow, business owners should start negotiations with their landlord to try and agree a rent reduction, rent holiday, or a more manageable payment plan. Providing evidence of the financial impacts is vital, and should help to strengthen the business owner’s position, but ultimately the final decision is down to the landlord.

It may also be worth discussing turnover rent agreements with landlords. This enables both parties to share in the good times and the bad. By splitting the payment into a fixed term base rent and a turnover element, companies can pay what they can afford at that time and landlords can benefit when things are going well.

Without these cash saving rental solutions, some businesses may not be able to stay open long enough to benefit from the oncoming wave of ‘staycationers’.

2. Get creative

Social distancing is one of the most challenging restrictions for the hospitality sector to cope with. Although most venues are now trading at 70 percent capacity, it’s still hard to see how lost profits will be recovered.

However, it is not impossible to increase these margins, as long as hoteliers and restauranteurs aren’t afraid to get creative. Rearranging layouts, utilising outdoor space and adapting opening hours to make the most of the Government’s VAT reduction and the ‘Eat Out To Help Out’ scheme are all potentially useful options.

3. Use support

On 26 June, the Corporate Insolvency and Governance Act 2020 came into force, including measures such as a 20 business-day moratorium - allowing businesses to temporarily suspend the repayment of debts. This is the biggest reform of the UK’s restructuring and insolvency framework in over 15 years.

Giving hospitality companies chance to restructure or seek new investment without fearing the action of creditors, the Act could be a much-needed lifeline. However, business owners must assess which of the proposed support mechanisms will work best for them, and gain professional advice where needed.

We’re here to help

There is a light at the end of the tunnel for the hospitality and leisure sector, and ‘staycations’ are part of it. By being proactive and taking advantage of the commercial opportunities available, businesses can considerably improve their chances of survival, helping the industry to come back stronger than ever.

Contact us

If you’d like guidance or support on turning the fortune of your business around and making the most of the commercial opportunities available, speak to Gareth Hegarty, or another member of our corporate restructuring and insolvency team.

We have launched our guide to recovery and resilience, helping to support businesses and individuals unlock their potential, navigate their way out of lockdown and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

Our free legal helpline offers bespoke guidance on a range of subjects, from employment and general business matters through to director’s responsibilities, insolvency, restructuring, funding and disputes. We also have a team of experts on hand for any queries on family and private matters too. Available from 10am-12pm Monday to Friday, call 0800 689 4064.

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