Written evidence submitted by the Bournemouth Christchurch & Poole Destination Management Board
Tourism:
Bournemouth, Christchurch & Poole (BCP) Destination Management Board (DMB)
Evidence Base
Who?
Response from Bournemouth Christchurch & Poole Destination Management Board (BCPDMB). The BCPDMB is the executive body of the local Destination Management Organisation that represents over 200 tourism partner businesses in and around the Bournemouth, Christchurch and Poole area.
The aim of the BCPDMB is to represent the interests of all those local businesses, groups and individuals that support the local tourism economy and contribute towards the development and promotion of the destination as a great place to visit, work and live.
Information below obtained through direct discussions with the sector along with responses to a Barometer survey during April 2020 sent to all Tourism partner businesses. Copy of survey findings attached as appendix1.
Question 1: What has been the immediate impact of Covid-19 on the sector?
The industry has almost entirely closed down with 83% of businesses being temporarily closed. Those that are still operating have had to adapt their normal operations to continue, such as diversifying the service or changing access arrangements for customers ie move to online service, home delivery or food take away.
Majority of businesses having to furlough staff with 69% of them applying to the Coronavirus Job Retention Scheme support. A further 16% of businesses are also seeking to apply for the Self-Employed Income Support Scheme.
A cash flow crisis for tourism businesses with income flows being nil for the majority and virtually nil for most others. This has been exacerbated with the timing of the crisis falling at the end of the winter period when either cash reserves for tourism businesses are generally at their lowest level, or bank overdrafts are at their limit. The lockdown couldn’t have happened at a worse time for the tourism sector as it happened just before Easter and the start of key shoulder months when tourism businesses in general start to replenish their revenue levels. The outlook is showing every prospect of some form of trading restrictions continuing into the critical peak period of June to September, and there is extreme anxiety that there will be no income earning opportunities before reaching the Winter off season again
Even though businesses are closed and staff furloughed, they are continuing to incur operating costs such as rent, utilities, security, general maintenance, animal welfare, but with no income coming in are cash negative.
Insurance companies not paying out – many businesses are reporting that insurance companies are using loopholes in policies to avoid paying out for loss of income, eg: even when a human disease/pandemic is specifically covered they will not pay as COVID-19 was an unknown virus at the time the policies were put in place.
Consumer interest has dropped off a cliff edge in April with 87% of businesses saying enquiries during this time were down by over 75% compared to the same month last year, and 89% reporting actual bookings down by over 75%.
Cancellations have also been widespread causing additional issues regarding the ability of businesses to provide refunds owing to cash flow/reserves being unavailable. Many bookings have been able to be rescheduled to later in the year or into 2021. Deposits which have not been refunded but deferred to 2021 however will have an impact on the income for the next financial year and although visitor numbers may recover the overall income will be lower as deposits were accounted for in 2020.
The event and festival programme has been decimated with all events planned until end of June either being cancelled or postponed until later in the Summer. With social distancing and restrictions on group gatherings looking like being in force for some time still to come there is real likelihood that these postponed events, and other events planned for later in the year will not be able to happen.
Open spaces, parks, gardens and beaches are being extensively used for people’s exercise during the lockdown and as such have put additional pressure on the management of these facilities through the need to maintain social distancing eg closing car parks and staff trying to actively move people on. This latter task is attracting increased levels of abuse and aggression to those staff members.
Tourism is actively being discouraged by all parties with very clear messages from the BCPDMB for people to Stay at Home.
Question 2: How effectively has the support provided by DCMS, other Government departments and arms-length bodies addressed the sector’s needs?
The swift response from the Treasury to commitment of The Coronavirus Job Retention Scheme has been significant and has supported enabling many businesses to survive (almost 70% have applied). This support has prevented large numbers of redundancies and permanent business closures. The regulations of the scheme however do mean that businesses are unable to furlough employees for part of their contracted hours in areas where a limited number of hours are still required. Many businesses would benefit if employees could be furloughed for a percentage of their job (flexi-furlough) and allowed employment for a short period each week to do essential work eg grounds maintenance. There is also much anxiety regarding whether the Job Retention Scheme will continue after June (see response in Q3).
The rates relief/holiday for retail, hospitality and leisure businesses has supported many businesses by taking out costs in this financial year. Rents and leases though are still payable for many businesses even though they are closed causing additional financial pain.
The Retail, Hospitality and Leisure Grant is also welcomed and provided essential funds to those that have received. These grants however are only open for those businesses with a rateable value of less than £51,000. This threshold though has left many businesses such as hotels, holiday parks, restaurants, leisure businesses etc who are in great need of direct financial support not being able to claim. The BCPDMB is fully supportive of the ‘Raise the Bar’ campaign seeking to raise this threshold to £150,000.
Further eligibility to grants should also be widened to include tenants classified as an ancillary to a park, public spaces or seafronts which are not on rating list and therefore not eligible for support grants. This also applies to other operators such as event organisers who are ineligible for grants owing to not having a rateable value.
At the time of writing it is noted that a new discretionary fund has been set up to accommodate small businesses previously outside the scope of the above grant scheme that continue to have ongoing fixed property-related costs (eg bed and breakfasts and businesses in shared spaces), but as yet have been unable to collect any evidence (factual or anecdotal) about this new funding stream?
The Business Interruption Loan Scheme offers long-term and low interest finance which is positive if they can be repaid. Many businesses will already have some form of loan or mortgage on their property and are already concerned about ability to repay these so are reluctant to take on more debt. This is even more so if the market is slow to recover and a real fear of defaulting on a larger debt and potential repossessions. Initial feedback has also suggested that obtaining these loans has proved difficult owing to banks caution of ability to be repaid.
Question 3: What will the likely long-term impacts of Covid-19 be on the sector, and what support is needed to deal with those?
The longer that restrictions are in place then the greater the impact there will be on the sector. If all restrictions are lifted by end of September then only 39% of businesses said they were highly likely/likely to survive, and this number falls to nearly 23% if restrictions are not lifted until end of December.
In normal times Tourism in BCP generates £1.068bn in turnover and sustains 17,300 jobs (2018 statistics by SW research Company), so if the above were to materialise then it would potentially mean a loss in tourism spend of some £652m (September), or £823m (December) to BCP area, along with loss of either 10,500 jobs (September) or 13,300 jobs (December). These figures would also have direct impact on the supply chain to the industry as well (eg laundry cleaners, food suppliers etc) and therefore also cast doubt on their ability to survive in the BCP region.
There is a clear need, and an explicit request, for businesses to know the planned programme of easing of lockdown and the schedule/order of business resumption (along with any associated measures that need to be followed such as restrictions on large gatherings and social distancing) so as that adequate planning can be made. Businesses will not be able to simply re-open overnight and will need time to prepare, especially with regards to making necessary adjustments relating to Covd-19 that will be adequately required (eg deep cleaning, staff training, reconfiguration of operational set up).
Social distancing will need to continue for some time into the future until there is reassurance that the virus is fully under control (not just for government but equally for the public as well) and/or a vaccine is in place. This will put added operational requirements in place for tourism businesses to deliver and they will actively have to manage keeping people the necessary distance apart which in many businesses will mean for example restricting capacity numbers, organising/managing queuing facility, leaving hotel rooms empty for certain number of days, installing ‘one-way systems’, additional and more detailed cleansing regimes (whilst predominantly relating to indoor businesses it will also impact outdoor as well).
The above measures will therefore have impacts both on cost and revenue. Additional staff may be required to manage the requirements, along with additional cost of sales such as additional cleansing materials/PPE equipment, railings for queuing, staff protection screens, public notices etc all adding to the expenditure budget. Reduced capacities will directly affect revenue as income streams will be lower and this reduction will mean many businesses being economically unviable. Businesses could increase their tariffs to potentially offset reduced income but in a volatile market place any significant increases would be a very risky move.
Indications from government (and as evidenced from other countries) are that the relaxation of Lockdown will be done in phases across the Summer so not all businesses will resume at the same time. The major concern over this is with regards to the current business support packages not being continued.
The current Job Retention Scheme is in place until June but will need to be extended for all affected businesses for as long as mandatory closures are in place. If certain businesses are not allowed to ‘re-open’ until after the peak Summer period though then this extension period should be continued through the Winter to stop those businesses from ceasing trading. If it didn’t and those businesses fold then the scheme would have just been a ‘stay of execution.’
Extension of the Job Retention scheme for a period beyond reopening on a flexible basis (ie allow some contracted hours to be worked in conjunction with furlough) would also be of great benefit to all businesses as it will take time for them to re-build their levels of trading to pre Covid-19 times and give greater ability to recover properly.
Phased re-opening will also mean a need to offer further Retail, Hospitality and Leisure Grants as well for those businesses still closed. As said above closed businesses still incur costs so need income to pay their bills. Also detailed above was the need to ‘raise the bar’ and lift the threshold of the grant scheme to at least £150,000 rateable value, as well as including those tourism businesses currently ineligible owing to not being on the ratings list.
The extension of government support is also important to make sure that there is still a robust and diverse tourism product available when this crisis is over. Whilst the BCP area is blessed with a high quality and stunning natural environment its success and desirability is also as a result of its extensive and diverse quality tourism product (eg range of accommodation, attractions, museums, theatres, restaurants, bars, special events programme, transport solutions etc). It is essential to the tourism product that these businesses are maintained.
BCP has a vibrant and active outdoor special events sector attracting hundreds of thousands of people to the area each year and generating significant revenue for the conurbation. There are significant concerns amongst the outdoor events community that social distancing measures are largely incompatible with the sector. It appears that events will be amongst the last areas to bounce back, concurrently the companies which deliver and supply this sector are falling between a lot of the support measures previously mentioned.
Successful resort destinations such as BCP also need to continually invest in the product and its infrastructure to ensure it remains competitive and relevant to today’s market place. This has always happened consistently in BCP from both the private and the public sector, and has helped to maintain our position as a leading UK visitor destination. The current situation however means that much of this investment will simply not be able to happen until sometime well into the future such as 2022 and beyond. The primary focus is on survival and returning to successful trading, rather than committing to new investment. This does not just reflect on the private sector but also the public sector as well, as their finances too have been dramatically impacted, and this will affect their ability to develop resort infrastructure.
An integral part of the country’s overall tourism product mix is the coaching and group travel market, and this is very much the case in BCP area. This provides business throughout the year to our resort but as with most tourism businesses the greatest volumes (and hence greatest income earning potential) are during the Spring, Summer and Autumn periods. The Spring market has already been lost and it is clear the Summer will be too meaning no income earning opportunity (and coach companies also have the same issues as other tourism businesses regarding the refunding of deposits/advance payments, or rescheduling of dates discussed above).
This has already had serious consequences on the sector with one local coaching company folding in last few weeks, along with a large branded national operator being lost this last week. The easing of restrictions will not see the problem disappear owing to the continuation of social distancing measures being needed, meaning much reduced capacities. In addition, with a high customer base of older people in this sector, user confidence will also remain very low for some time (including 2021) and therefore likely result in many planned tours/excursions being cancelled as they will not be viable. This will also have direct impact on BCP hotels and attractions in 2021 as this trade plays an important part in supporting their business plans. The coaching sector therefore needs to be classified as Tourism and hospitality and be able to access all the government support, grants and loans etc being provided, along with continued government support (as stated above) following easing of restrictions until such time that they are able to return to some form of effective operation.
The International Education sector has been critically affected by the current crisis and future bookings have stalled and effectively dried up. This sector plays a hugely important role in the tourism sector in BCP as its 30,000 students per year generate up to £200m to the local economy. The easing of Lockdown restrictions will not immediately benefit this sector as it is dependent upon overseas students, so this market will be slower to resume. The crisis is international with destination countries still fighting the virus with their own lockdowns and regulations/restrictions in place, along with their economic downturn as well. These countries need to get their ‘houses’ in order first, and then the UK needs to be seen, and believed, to be a safe destination before business can begin to restart. Continued government support to this sector is therefore vital until at least the sector can start trading in earnest again which may not be until end of 2021.
Once this sector starts moving again it needs to have every opportunity to succeed quickly and the government needs to help encourage overseas students to study here, and in doing so review and relax the current onerous visa scheme and regulations to make it easier and quicker for applicants, and enable the UK to compete effectively on the world market.
Further support to the tourism sector would be achieved through a reduction in the level of VAT which would be seen as hugely beneficial. In 2008 the reduction of VAT to 15% was an incredibly important element of that particular crisis recovery plan, and should be so again now. The tourism industry has been vocal for many years now on trying to get the rate reduced to the same as our European competitors (5%). Even a reduction to 10% would create stimulus to the industry allowing businesses to be more competitive, and help to start the sector moving again.
Question 4: What lessons can be learnt from how DCMS, arms-length bodies and the sector have dealt with Covid-19?
Too early to say as the crisis is still on-going and the full impacts will not be known until all business has resumed and operating to its new ‘norm’.
Question 5: How might the sector evolve after Covid-19, and how can DCMS support such innovation to deal with future challenges?
The sector will need to adapt to the new look market place when the fight against the virus has been won and communications and promotional messages will clearly need to demonstrate that destinations (and the component sector elements) are safe places to visit. This assurance of safety also needs to extend to the non-regulated elements of the sector as well eg Air b’n’b so some form of accreditation needs to be applied to them.
The local resident population will need to become an integral part of the early actions of business resumption planning as they will need to be on side with local tourism aspirations. There are indications of local residents objecting to the attracting and drawing in of large numbers of visitors from all across the country who could be potential carriers of the virus and thereby infect the local population.
There is clear opportunity for the tourism sector to help kick start the economy by encouraging Britons towards staycations, city breaks, day trips etc. National research is suggesting that overseas trips will be one the last markets to recover so early promotional activity from Visit Britain/Visit England needs to be clearly targeted at the domestic market and holidaying at home as opposed to UK inbound visits.
Notwithstanding the above, the sector in BCP area still has a measure of positivity about the future. The BCPDMB is working very closely with the industry sectors in developing a strong recovery plan, but this needs to be coupled with the government continuing the support as set out above, and if this happens then there is the feeling that the sector can eventually bounce back.