Have you considered the risk of a local lockdown on your leisure or tourism business?

With non-essential shops re-opening and a drop in the number of new cases, there is currently an optimistic view that the worst of Covid-19 has now passed. Policy now seems to be to move towards a limited, socially-distanced re-opening of tourism and leisure businesses at the earliest opportunity.

Of course, any change requires continued progress on many fronts but the hope is certainly present.

 

The risks to the tourism and leisure sector

I am speaking to a number of tourism and leisure businesses across the South West on a daily basis about the many challenges they are dealing with. The range of risks facing the sector seems to be well understood by my clients. These include:

• A reluctance from customers to book holidays or use leisure facilities. This could mean losing the 2020 season altogether, or dealing with the challenges of running a late season.

• The costs associated with adapting to the new guidelines. Signs, equipment and training are not free and could be a significant drain on smaller businesses.

• The impact of the withdrawing of furlough just before the winter season, which is the down-time for most of these businesses.

However, one of the less considered risks is, to my mind, potentially the most catastrophic – the risk of a local lockdown.

From the very start of the current relaxation it was suggested that, in the event of a spike in infections in one place, there might need to be a local lockdown.

 

How would a local lockdown affect the tourism and leisure sector?

Although we have heard many references to the future possibility of local lockdowns, nobody has published definitive guidance on what might be involved or how widely the boundaries might be drawn. 

For example, a two-week lockdown of a school would have a lesser impact on a local restaurant than, say, a four-week closure of an entire seaside town. Or, perhaps even worse for an individual business, what about a local lockdown of one hotel, holiday park or restaurant?

That uncertainty is a massive risk for all businesses – but especially in the tourism and leisure sector where re-opening with social distancing in place is going to be expensive. These businesses are reliant on a very short season even in the best of years. 

 

How should a business prepare for a local lockdown?

Before rushing to re-open, the risk of a local lockdown should feature in the decision-making process of every business owner. Things that should be considered need to include:

• The ability to re-furlough staff at short notice if required (bearing in mind that from 1 August this scheme has a cost to the employer, detailed here in recent Government guidance).

• The costs of preparing for a limited re-opening that could be taken away at any moment.

• If bookings are taken then the possible liability of having to repay deposits. Many businesses use deposits to fund the costs of the business prior to the guest arriving so funds to repay may not be available.

Perhaps I am being over-cautious. What are the odds of a local lockdown affecting any specific business at just the wrong time?

But, then again, what was the likelihood of the Covid 19 impacts even four months ago?

Any plan to re-open should include some thought of the risks of a second, narrower lockdown.

 For further advice on this matter, please do not hesitate to contact me or your local Thomas Westcott office.