Financial support for hospitality firms must be extended to avoid the loss of millions of jobs, restaurant and hotel tycoons Sir Rocco Forte and Richard Caring have warned.
A continuation of the taxpayer-funded furlough scheme or further bailouts may be essential to protect the industry from a potential catastrophe, they said, as continued social distancing means restaurants, pubs and bars are expected to be among the last to reopen.
Richard Caring, chairman of Caprice Holdings and is behind restaurants including The Ivy, said the Government must extend the programme or thousands of businesses risk being forced to lay off millions of workers.
“The question mark is - and it’s a huge question mark: is the Government going to treat the hospitality sector any differently as far as furlough is concerned?" he asked.
“Because when they say we are allowed to reopen, you will still have 100pc of your staff. But with social distancing in place, you’re not going to need 100pc of your staff. If they’re going to maintain social distancing but then suddenly pull the plug on all the financial support then I think you’ll see blood flowing as far as hospitality is concerned."
Many firms expect to be operating at about 50pc capacity when they are allowed to reopen so staff can operate safely and diners can be seated at a distance. This could deal a brutal hit to profits in an industry that already runs on razor-thin margins.
The vast majority of hospitality workers have been put on the Government’s coronavirus job retention scheme, which pays up to 80pc of salaries and is due to last until the end of June.
The industry is Britain’s third largest employer and accounts for 3.2m jobs. Overall, the scheme is being used to support 6.3m jobs at a cost to taxpayers of £8bn.
It comes after auditors for Caprice Holdings warned that material uncertainty related to the coronavirus crisis meant Mr Caring could be forced to foot the bill for any shortfall in funding required to keep the business afloat.
Hotelier Sir Rocco said ministers should continue to offer state aid for furloughed workers for a further three months to the end of September.
Government support has allowed Sir Rocco’s hotel group – which includes Brown's in London and the Balmoral in Edinburgh – to cut its monthly wage bill from £7.5m to £1.5m, while enabling it to top up the remaining salaries of some of its lower-paid staff.
Sir Rocco said: “The furlough scheme is very important and should continue, it shouldn’t stop when lockdown is lifted. We will have to wait for international travel to come back to get back to normal and the Government needs to take that into account.”
The majority of hotels have shut under lockdown, with some sites making rooms available to key workers such as frontline NHS staff.
In a letter to landlords seen by the Financial Times, Travelodge said it will lose £350m in sales in 2020 and warned it will take several years for a return to 2019 levels when they hit almost £730m.
The budget hotel chain has now asked landlords to waive £146m in rent over the next two years as it tries to shore up its finances.
Mr Caring said ministers should continue to monitor the situation rather than setting a time restriction on financial support. @The Government has to have some sort of formula to protect the employees of these businesses so the employers don’t wake up and have to make half their staff redundant.”