London has moved into Tier 3, the highest level of COVID-19 regulations, with health officials warning of a new strain of coronavirus but hoteliers stating they and other hospitality providers are being unfairly penalized.
Industry sources said there is no evidence positive cases are a direct result of the new rules of socializing, especially when stringent measures are in place to avoid infection.
Parts of Essex and Hertfordshire, which border Greater London, also have been moved up into Tier 3, with other parts of the United Kingdom already in the highest tier.
UKHospitality, the country’s hospitality membership organization, said the decision to move London into Tier 3 will destroy many businesses and livelihoods and result in no revenue in the run-up to Christmas, which traditionally is the most profitable period of the year. Even in 2020, London hoteliers hoped for some relief with business picking up during those weeks.
UKHospitality CEO Kate Nicholls, said in a news release: “The spread (of COVID-19) is being predominantly driven through schools—even the Mayor of London has pointed this out and called for schools to stay shut until January. Yet, once again, it is hospitality that will take the hit.”
“The burden of a region being moved into Tier 3 falls almost exclusively on hospitality businesses. It is an illogical tactic that fails to tackle COVID-19 effectively but does push businesses closer towards failure,” she added.
Hoteliers say they and their staffs are hurting.
Alan Morgan, CEO of GLH Hotels, which has a London portfolio of 14 hotels comprising approximately 4,800 rooms, said he has recently had just five of his hotels open, but the Tier 3 decision has now put everything on hold. GLH owns and operates the Amba, Guoman, Thistle and Thistle Express brands and also owns and manages the Hard Rock London.
Morgan said as of 16 December, GLH will only be able to have one hotel open and associates plan to funnel business there.
“I will be lucky to sell 30 rooms a night,” Morgan said. “We are keeping open our (flagship) Royal Horseguards, and all guests booked in our hotels will be upgraded to there, so it will be a great experience for them.”
Royal Horseguards is located between St James’s Park and the River Thames, close to Whitehall and Downing Street.
“Footfall is less than 2% of what we would have seen pre-COVID,” Morgan said. “We had 200 or 300 rooms booked, as opposed to (average rooms booked of) 4,500, and we had a line of sight to 400 or 500. Now it is 20.”
Morgan said the lockdown decision is “extremely disappointing.”
“We had three hotels up and running, with two more to open, and we had started to see some green shoots, to see some bookings. With this news, and more dramatically than booking started to grow, we saw very quickly (a number) of cancellations,” he said.
His principal concern is that government officials had not taken into account why people are booking hotel rooms now and the extreme lengths hoteliers have gone to make sure guests remain safe.
“Hotels are merely a room where members of the same family can stay, with far less risk than anything else they can do. It is bewildering as to why government has taken this decision,” Morgan said. “A large number are booking purely to get away, to look at different spaces from their own parks. They are saying, ‘I just need a night away. I am going stir crazy in my house.’ It is a false pretense that hotels are alcohol-fueled, certainly as pubs and bars are closed.”
Remaining faith
Investors and hoteliers retain their faith in the strength of London.
David Kellett, senior director of hotel transactions at Invesco, said long-term investment in the big cities, including London, will continue despite the pandemic.
“The U.K. government cannot afford for London to fail, so the whole government machine will push everyone back there. It is a good time to buy in those core markets,” he said.
Kellett said hoteliers must continually tweak their business plans during the pandemic. Cost control is a priority and tight budgets will be an asset in the long run.
The Tier 3 decision is by central government, not the city’s government, which in this scenario can only advise and seek cross-party support for their proposals on the matter.
Speaking on radio station LBC, London mayor Sadiq Khan said, “I don’t see many 10-year-olds or 15-years-olds, 14-year-olds, in pubs, bars and restaurants or culture venues, which will be closed down if the governments moves us into Tier 3. … It will be catastrophic for the sectors, (and central government) therefore must provide additional financial support to avoid these businesses going bust.
“These businesses have had an awful nine months and spent a fortune making (themselves) COVID-secure since reopening on 2 December,” Khan added. “They will now need to close, and they could close permanently. By the way, these sectors will be crucial for our economic recovery next year.”
Job pressures
Hoteliers said the Tier 3 decision places many more jobs in the sector at risk.
“I have had to make a lot of redundancies, and we thought we were at the end of that journey,” Morgan said. “But if we carry on like this, I am going to have to make a fresh review over the next few weeks.”
It’s been challenging to keep employees encouraged and positive during the pandemic, Morgan said.
“There is a massive mixture of reactions (from staff). The focus is to communicate with the broader team on what we know and do not and how to come out of this as strong as we can,” he said. “I am doing everything I can to keep them in a job, but I cannot make those promises. Some have not been in work since March.”
There is some concern of the long-term effects of being out of work for so long, Morgan said.
“There is a huge mental-health aspect, too. I have staff begging me to have them come back, even if you cannot pay them. I think that is a greater risk than the virus,” he said. “The vaccine is the light at the end of the tunnel, but how long is the tunnel and how strong is the light?”
It’s also been difficult to stick to one business strategy during the last several months, Morgan said.
“We have chopped and changed so many times, it is very difficult to plan, and every time new regulations are put in place it damages confidence in traveling into London,” Morgan said. “These are decisions that do relate to the data. Some more consideration should be given to some sectors, rather than tarring everyone with the same brush.”
According to the U.K. Office for National Statistics, there are 819,000 fewer employees on U.K. company payrolls in November than there were when the pandemic was first announced. The worst sector affected is hospitality, which it said accounted for more than one in three of those lost positions, almost 300,000 jobs.
Across the entire country, the rate of unemployment increased to 4.9% in the three months to October, with the total unemployment count now being approximately 1.7 million. The last census count in 2019 calculated the U.K population to be just under 67 million.
