Our Industry Needs Help to Survive

We need help. That is the simple message the island’s hospitality sector has sent out during a press conference hosted by the Licensed Victuallers Association, and the Restaurateurs Association.

Industry leaders met this morning, on what should have been another busy race week day, to outline the difficulties faced by the industry since the start of the pandemic and the support they need to come out the other side. They were Geoff Joughin, Licensee of The Albert in Douglas and Chairman of Licensed Victuallers Association (LVA), Mitch Sorbie, owner of “Just Pizza and Pasta”,  Enzo’s Restaurant owner Enzo Ciappelli, Andy Saunders of Quids Inn and Darren Walker of Barbary Coast.  The conference was compered by Jamie Lewis (far left in the picture below).

One Size Doesn’t Fit All

One of the most consistent themes expressed by the business owners is that the support offered by the gov has been too generalised and doesn’t reflect their individual needs. 

Darren Walker said the idea that a business such as JAKS and Barbary Coast should be treated the same as, for example, a chippy was ‘ridiculous’ and something that he ‘cannot comprehend or fathom’. He said the gov should be able to put together a package of support with structured payments based on information it already holds on each business. 

Enzo Ciapelli added: ‘Yes the government has put a lot of schemes in place, but the schemes have not been tailor made for our industry and I have to say that I have found the government to be very ignorant of our industry. There has been a big impact on our industry from the loss of visitors, from the loss of events and everything that we aren’t going to see this year. We hope that some of those events will come back in 2022. That represents a lot of income and turnover for our sector.

‘We have worked hard in our industry to develop the standard of restaurants that we are running for discerning customers and obviously we do respect that the government views this as part of the lifestyle of the Isle of Man. People working from home have completely decimated our lunchtime trade so we are now relying on weekend nights, when most establishments are doing most of their work, but this is not good enough for us.’

He said the industry needs the gov to better categorise the industry to ensure the support can be better targeted and said that of all the potential schemes that could be put in place, ‘salary support would be the best’. 

Debts

As well as a downturn in trade, many of the island’s hospitality sector has taken on increased debt, with money owed either to banks, the gov or even families and friends. 

Darren said: ‘There was no level playing field in respect of the various sectors. While some sectors made profit, our sector was left with huge debts. One grant fits all was ridiculous, not taking into account the size of any business.’

Mitch Sorbie added: ‘Having moved premises, invested heavily and created a new team just before Covid struck we have dropped over £500,000 in turnover.  We also have increasing debt levels that are hard to fund in this sector and growing debts to the government for VAT and NI. I’ve been told that debt levels among local hospitality businesses have grown by around 45% during Covid. Without the reduction in VAT last September, I doubt that many of us would be here today, this was the key piece of support that helped offset some of our fixed costs.’

Laura Garaty of The Commercial Hotel in Ramsey shares the frustration expressed by so many in the sector: ‘While figures show that licensed premises received, on average, support of £18.5k for the 22 week period they were closed, the majority of this was, rightly,  for employees in the form of salary support – leaving us to pay our ongoing bills out of our own pockets.’

Darren Walker said gov support would help businesses pay off their debts and then also allow them to grow.

Mental Health

Geoff Joughin said that a concern from inside the LVA was the damage done to people’s mental health this year through repeated closures of pubs and hospitality venues. He said this has not only affected the customers but also the staff and owners and licensees who have been living under immense pressure.

Geoff said: ‘I am personally concerned that a number of our members are now in situations of extreme personal stress. Lockdown, border closures and cancellation of events have destroyed their cash flow, they’ve had no pay for the last 15 months, they face the prospect of zero profits for at least two years and based on a forecast from PWC look set to be over 30% down again this year, with no end in sight. Customers of our pubs use them as a safe haven to unload, vent and share. It is increasingly difficult to support this when owners are struggling themselves.’

Support

As part of the ongoing review into the island’s recovery from Covid, PwC was commissioned by the Business Agency of the DfE to review how local consumer facing businesses have coped during the pandemic, how support schemes have worked for them and whether further assistance may be necessary.

That report has been shared with the gov and members of the hospitality industry. In a statement, the LVA and RA said: ‘Initial recommendations shared were that, like in the UK, salary support should continue where a reduction in turnover is evidenced.  Government should also explore ways to continue the effect of reduced VAT rates. Introduce payment plans for government debt reflecting the exceptional level of disruption in 2020 and 2021, provide an enhanced credit line to support working capital needs and develop a more appropriate adaptation scheme, recognising the immediate financial pressures of these businesses.  There is also potential to provide a reopening grant scheme as the UK has done.’

Andy Saunders said that he and the others ‘fully support the initial recommendations’. He added: ‘With two thirds of visitor expenditure on Island being spent in bars, restaurants, attractions and shops, and one third on accommodation, the lack of events visitors has been disastrous for my business this year. The summer is not looking much better, with locals predicted to head off Island and no sign of an influx of visitors at this stage. What people don’t seem to realise is that the money we all take from the big events and visitors, funds all year round opening for the benefit of everyone here. Many of us are now facing the prospect of closing for more nights, as – without tourists – we will be unable to subsidise opening during the quieter nights and months. All we are asking for is some understanding and funding support from the Government to help us, and other consumer facing businesses over the next year.’

Enzo Ciapelli, who was also representing the RA, added: ‘We have worked hard as an industry to develop top-class restaurants to serve our discerning and valued customer base. Working from Home has severely impacted lunchtime trade in Douglas, and with no Business visitors currently, restaurants will face a difficult time for months, maybe even years to come.’

Small Businesses

While the representatives were from the hospitality industry, they also made clear that they want to see better support for all small businesses on the island that need it. The island’s economy is led by small businesses, with 95% of businesses employing under 25 people, providing 65% of jobs.

Darren said: ‘We’re sitting here today on behalf of the LVA and RA and as business owners, but we’re talking on behalf of all small businesses on the Isle of Man. Whether they be dog groomers, hairdressers, whoever it might be, we actively encourage them to come forward and make a stand for themselves as well. We can only talk on behalf of our trade today but we know they’re struggling, that they’re disappointed in the support given and that they need the support as well.’

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