Covid-19: Advice for Hospitality Businesses

Covid-19: Advice for Hospitality Businesses

The hospitality sector is amongst the worst hit by the coronavirus pandemic. LawBite's Barbara Jamieson sets out five steps for hospitality business owners to take during this time

By Barbara Jamieson

The past few weeks have resulted in business owners across the UK, and the world, dealing with unprecedented challenges. And, given the nature of the Covid-19 crisis, it's impossible to know when the situation will end, or how things will pan out for various industries.

Hotels, restaurants and bars are amongst the hardest hit by the pandemic, with government announcing the closure of all non-essential businesses. Although it can seem like an overwhelming time, it's important to focus on the practical steps you can take to protect your business. This can range from pivoting your business model to offer an alternative service or simply using this time to review your contracts and entitlements. Here are five steps to get you started:

1. Understand your contractual obligations

This is a really important time to be reviewing your supplier and client agreements.

In terms of your supplier agreements, is there a force majeure clause you can trigger which means that you no longer have to pay certain outlays that aren’t affordable right now? 

As for your client agreements, are you entitled to withhold deposits that clients have already paid? What are your clients’ cancellation rights? It might be that your clients are contractually entitled to refunds under your contracts. It's preferable to know this now, and understand the full scale of the problem, so you can start setting money aside to deal with these requests.

2. Understand what you're entitled to

The Government’s assistance measures are being updated frequently. Businesses are advised to investigate the support that they're entitled to, and this could prove invaluable at this time, whether it’s rent holidays or help with paying employee wages. 

This is also a good time to speak with an expert to fully understand your responsibilities towards your employees.

3. Tweak your marketing strategy and offering

Where funding allows, economic downturns can often be the time for businesses to flourish. If possible, businesses are generally advised to not significantly cut their marketing budget. 

Realistically, international travel may be limited for quite some time, but domestic trade could become a vital source of income for the foreseeable future. If there are resources available, hospitality businesses should consider tweaking their offering, such as by investing in attracting domestic clients, or looking for ways that they can support their community or essential sector businesses.

4. Focus on value rather than cutting costs

During this time of closure, management teams should be tasked with creating plans for adding value to customer experiences, rather than trying to slash prices to attract customers. Reducing prices may not help rectify the financial situation hospitality businesses currently find themselves in but, when these businesses re-open, customers are likely to be attracted to offers that involve a higher value experience (such as food and beverage upsells for hotels).

Businesses may also wish to be flexible with their bookings at no extra cost, to help reduce customer fear that they may lose money by making a hospitality purchase.

5. Use this time to raise brand awareness

Whether it’s providing food to the local community, or allowing premises to be used for another purpose during this time, there are many ways that hospitality businesses can give back to the local community during the current climate. These actions are the ones long-remembered, and can significantly help improve brand awareness and customer associations with the brand.

The Covid-19 pandemic is constantly changing, and no one can fully predict how matters will pan out, or how long this will last. However these five steps could allow business owners to adapt and future-proof their hospitality business. 

About the Author

Barbara Jamieson is a LawBrief at LawBite, the UK’s leading online legal portal powering a fully SRA regulated and insured UK law firm that specializes in commercial law for business. Barbara Jamieson is qualified in Scotland, New York and California, and has worked at top Scottish law firms Maclay Murray and Spens LLP and Brodies LLP. Barbara also spent three years working in-house at investment management firm Martin Currie, advising on financial services and commercial contracts.