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Stay Open Or Shut Down? How Best to Weather Storm COVID…

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Stay Open Or Shut Down? How Best to Weather Storm COVID…

Stay Open Or Shut Down? How Best to Weather Storm COVID…
January 04
13:24 2021

With the recent news that the Government has authorised the use of at least two COVID-19 vaccines there seems, at last, to be light at the end of the pandemic tunnel. Unfortunately, it is also clear that the next few months will remain extremely challenging for all businesses, especially those in the independent hotel and leisure sector. Indeed, recent research shows that as many as 50,000 pubs and licensed premises could remain closed over the next few months and many operators are asking how they can survive until March. Historically the start of the tourism season in Scotland, this is the date by which it is hoped that some version of normality may have returned.

Pete Seymour provides a few pointers on how best to weather the current COVID storm.

The main question independent hoteliers need to consider is whether to put their business into hibernation or whether they should carry on trading. In a normal year, Christmas and Hogmanay is a time for making a good profit and for setting up a business for the year ahead. However, the painful truth is that it is going to be very difficult for many businesses to make a significant profit over the next few months.

Putting a hotel or other leisure business into hibernation is going to cost money. That said, costs such as light, heat and power are largely predictable so it’s relatively easy to plan in advance.

However, if a business stays open and continues to trade then it will have to cover a wider range of costs, such as wages and raw materials, and there is little way of being sure what, if any, profits it will make.

The question is, what’s better – to know what your losses will be, or to take a gamble on potentially making a significant, unquantifiable loss?

Of course, there are a number of key issues to take into account. If you feel your location and business model will guarantee a good level of custom over the next few months – and if your cash reserves are strong – then it will make sense to stay open. If not, then it may be sensible to close up for a while.

If you do decide to put your business into hibernation, it’s worth bearing in mind the following considerations:

  • Let your customers know your plans and use this as an opportunity to market springtime offers. Take deposits for when you reopen
  • Look for ways to shift stock
  • Always keep furloughed staff abreast of developments to let them know how your plans may affect them
  • Inform your insurer and adhere to all relevant insurance criteria.
  • Decide whether you are going to live on site, employ a caretaker or make regular inspection visits
  • Make your property winter-safe and as secure as possible
  • Think about making your venue available for your local community to use, which may help to cover costs such as light and power

If you decide to keep trading:

  • Let your customers know and use it as an opportunity to market deals
  • Look into options to diversify your business
  • Re-purpose your kitchens to offer a take-away service
  • Offer ready-made meals
  • Speak to operators such as Deliveroo and Just Eat to provide deliveries
  • Work with your local community to generate positive PR about the fact you are soldiering on through these testing times

Whichever decision you make, keep up to date with the latest support offered by the government and banks (although many businesses have now reached a point where they don’t want to borrow any further).

Above all, the next few months should be viewed as an opportunity to review your business and prepare it for the ‘new normal’ ahead. This self-audit might involve reviewing your property management system (PMS), your check-in systems and procedures, and your future procurement needs. Think about your strengths and weaknesses and assess how you can trade more effectively in the future.

Pete Seymour is Head of Licensed Trade and Leisure Agency at Graham & Sibbald, whose team of specialist chartered surveyors work extensively in the Scottish hospitality sector to advise and assist clients on all aspects of commercial property transactions.

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Catering Scotland

Catering Scotland

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