Foreword

The tourism and hospitality sector has been hit hard by the COVID-19 pandemic, with nationwide lockdowns highlighting not only its importance as an employer, but as a much-loved part of British society. Most hospitality businesses are small or medium enterprises located throughout the country; in the heart of cities, on local high streets, along coastlines, countryside and in remote idyllic rural locations.

With lockdown restrictions and forced closures, people have had an enforced period where they were unable to enjoy and visit such businesses. Subsequently our local pubs and restaurants are appreciated now more than ever. However, there are many small firms that supply goods and services to business in the accommodation and food services sector, which are just as vital despite being less documented and often undervalued.

Businesses such as laundrettes that supply linen to hotels, coach operators that transport us to our day trips and the catteries that keep our pets safe when we go away, are the unseen support network which underpin and facilitate the public facing businesses. It is important that they are not forgotten. Businesses like nightclubs have been unable to open, and wedding businesses, often small firms run by women, have had to operate at significantly reduced capacity, with little notice of when and how they can operate.

Jennie Riding, FSB Tourism and Hospitality Chair

Most hospitality businesses are small or medium enterprises located throughout the country

As the UK commits to its net zero goals many small businesses in tourism and hospitality are already forging ahead in making their businesses environmentally friendly, but more help is needed to ensure all small businesses can meet these environmental goals.

The hospitality and tourism sector is wide and diverse. Not only can they provide an opportunity for young people, but it also serves as a magnet for successful entrepreneurs, many of them women and ethnic minorities.

Towering business rates, access to labour, the rising costs of doing business and access to highspeed broadband are just some of the many challenges small firms in this sector faced prior to the pandemic. In many cases the pandemic has merely served to exacerbate these issues whilst also creating new obstacles and issues that may hinder the path to success. The UK Government must expedite policy interventions to support small business ensuring the sector can ‘Build Back Better’. Government departments must also seek to work closer together to understand how policies, such as local planning changes, late payments, VAT and immigration impact on small firms in the hospitality sector.

Tourism and hospitality businesses are a crucial part of our communities, providing a meeting place for many and playing a key role in tackling loneliness and improving wellbeing. The disruption to the industry has provided an opportunity to rethink the importance of these businesses and the way in which they are supported. From facilitating start-ups, supporting growth, providing for investment in people and development, with careful planning and provision we can all enjoy the benefits of the tourism and hospitality sector flourishing once more.

Key Findings

High streets

  • 44 per cent of small hospitality and tourism businesses are on or next to the high street, more so than the average small business.
  • Hospitality businesses feel more positive about their local high street than other businesses, but 63 per cent feel concerned about its decline.
  • Over half (54%) think making vacant units readily available for businesses to let would help save the high street.

Business rates

  • 67 per cent of small hospitality businesses who receive Small Business Rates Relief/the Small Business Bonus say they would not be able to survive without it.
  • Over half (56%) of small hospitality businesses say further rates relief would support their  high street.

Employment and enterprise

  • 31 per cent of FSB small businesses are owned by women, rising to 41 per cent in the hospitality and tourism sector
  • Small hospitality businesses are more likely than average to hire:
    • Women (87%)
    • Lone parents (28%)
    • Ex-offenders (3%)
    • Young people:
      •   Aged 16-17 (25%)
      •   Aged 18-20 (35%)
      •   Aged 21-24 (38%)

Immigration

  • 43 per cent of small hospitality businesses employ at least one EEA national, more than any other sector.
  • More hospitality small businesses say location limits their access to labour than other sectors (36%).

Supply chains

  • A quarter (24%) of small manufacturing businesses supply to hospitality and tourism.

Community

  • 22 per cent of small hospitality businesses offer shared community spaces.
  • At the beginning of the pandemic, 33 per cent of small hospitality businesses had donated to local food banks, 26 per cent had carried out a broader community role, and 12 per cent had provided free services or accommodation to key workers.

Impact of COVID-19 restrictions

  • 77 per cent of small hospitality and tourism firms were unable to adapt their businesses at the beginning of the pandemic.
  • A year into the pandemic, more than half (59%) of small firms in the sector reported their businesses premises as closed, and 26 per cent were trading in name only and only 53 per cent were confident their businesses would survive.

Regulation changes

  • 65 per cent of small hospitality and tourism businesses said the relaxation of planning regulations for pubs and restaurants, allowing them to operate as takeaways, was important.

COVID-19 finances

  • 31 per cent of small hospitality and tourism firms in England used the leisure, hospitality and retail grant of £25,000, and 54 per cent used the Small Business Support Grant of £10,000.
  • 53 per cent of small hospitality and tourism businesses said they have used a CBILS or  BBLS loan.
  • 56 per cent of small firms in the sector have taken on new or existing debt as a result of COVID-19 – higher than any other sector.
  • Those carrying some form of debt has risen from 59 per cent pre-COVID to 77 per cent  post-COVID.

Energy and the environment

  • 83 per cent of small hospitality and tourism firms said energy is a significant cost to  their business.
  • 44 per cent of small businesses in the hospitality and tourism sector would switch tariffs if offered a renewable tariff.

Recommendations

Better co-ordination

  • UK Government should develop a hospitality and tourism sector strategy, overseen by the Minister with responsibility for hospitality, bringing together the various departments to focus on short-, medium- and long-term support for the sector. (p.15)
  • UK Government should set the tone for what the role of Destination Management Organisations should be, creating basic standards for the organisations to adhere to while leaving room to adapt to local needs, delivered through VisitBritain, or through the Britain is Great campaign in central government. (p.17)

Regulation

UK Government (England) should:

  • Make permanent the streamlined procedure to allow businesses that sell food and drink to apply to the local authority for a pavement licence. (p.50)
  • Maintain the right for pubs, cafes and restaurants to be able to operate as a takeaway alongside their main business. (p.50)
  • Introduce a ventilation grant scheme to assist small businesses in making their premises COVID-secure for the long term. (p.51)
  • Introduce minimum standards for responding to businesses on licensing and inspections, such as food hygiene ratings. (p.51)
  • Relax rules for temporary campsites, allowing them to operate until October 2021 through  a temporary change to permitted development rules. (p.51)
  • The secondary legislation required to ensure that progress can be made following the passage of the Parking Places (Variation of Charges) Act and the Parking (Code of Practice) Act must be made. (p.16) UK Government should:
  • Amend the blanket ban on online advertising for foods high in fat, salt and sugar in the upcoming Health and Care Bill to enable small businesses in the sector to recover from COVID-19 by continuing to advertise their products to customers via newsletters and social media pages. (p.51)

Hospitality on the high street

  • Government should create Hospitality Enterprise Zones (HEZs) in England. HEZs are locally defined areas in which small businesses can receive incentives to take over vacant spaces. They would be centrally funded through the Shared Prosperity Fund and locally delivered by LEPs. (p.15)
  • UK Government should address the issue of a minority of landlords’ refusal to engage with tenants by placing a greater emphasis on mediation and placing limits on the amount of debt that landlords are able to claim in court. (p.15)

Tax, finance and investment

UK Government should:

  • Introduce an alcohol duty reduction on beers, ciders and wines to support small businesses to bounce back, at least for a limited period. (p.23)
  • Extend the hospitality VAT rate reduction to five per cent until March 2022. (p.23)
  • Scale up the New Enterprise Allowance through additional mentors and increased weekly payments, to support the long term unemployed into starting up for themselves. (p.37)
  • Treasury Ministers, working with the British Business Bank and UK banks, must provide greater clarity on Pay As You Grow and ensure the option is available to all businesses with BBLS debt. (p.25)
  • Extend COVID-19 loan support to pre-existing debt. (p.25)

UK Government (England) should:

  • Extend 100 per cent business rates relief throughout the full financial year or until the recommendations from the Business Rates review are implemented. (p.23)
  • Ensure improvements made to a property for environmental or safety reasons are zerorated.(p.23)

Jobs

UK Government should:

  •  Reduce non-wage employment costs through cutting Employer National Insurance Contributions. (p.28)
  • Support small businesses by uprating the Employment Allowance. (p.28)
  •  Extend the zero rating of secondary National Insurance Contributions for all Freeport employees to those at risk of long-term unemployment in all areas. (p.29)
  •  Ensure T Levels work for smaller hospitality and tourism businesses by extending incentive payments for employers to deliver industry placements beyond July 2022. (p.30)
  •  Extend the Kickstart scheme beyond 2021 to support small hospitality and tourism businesses to employ young people as they recover. (p.30)
  •  Extend the Youth Mobility Scheme to EU countries and should not include annual quotas. (p.32)
  •  Adopt the Migration Advisory Committee’s 2020 recommendation and pilot a remote visa.(p.32)

Supply chains

  • The Government must amend Financial Reporting Council (FRC) guidance and/or legislate at the earliest opportunity to force Audit Committees, led by a Non-Executive Director, to assess and report on payment practices in company annual reports, finally broadening accountability to whole company boards. (p.35)
  • UK Government (England) must speedily distribute the £1.5 billion business rates support to suppliers and release the guidance as a matter of urgency, getting the money to hospitality and tourism supply chain businesses as quickly as possible to support them through a difficult period. (p.35)
  • UK Government should introduce training for officials on the nature of B2B supply chains, so that the State is better able to act to support these businesses in future crises’ and during recovery. (p.35)

Net zero

  • Local authorities should provide small businesses in hospitality with free recycling services,including food recycling. Capped at a level sustainable for local areas, this would empowersmall businesses and disincentivise non-recyclable waste. (p.42)
  • Deliver a programme of ambitious policies for achieving net zero, following the principles laid out in ‘A Just Transition to Net Zero: the fairness principles’. (p.42)
  • Ensure environmental improvements made to a property are zero-rated. (p.23)

Transport

  •  UK Government should improve rural public transport by continuing the reversal of Beeching cuts and make improvements to the usability of railway stations. (p.44)
  • UK Government should work to introduce multi-operator and multi-modal ticketing, encouraging public transport usage. (p.44)

Broadband

  • UK Government should work closely with industry to find solutions to improve broadband access for the areas that will not be gigabit capable by 2025 as soon as possible, including very hard to reach premises. (p.46)

 

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