The Headlines & The Realities of Hospitality

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Galway Daily business The Headlines & The Realities of Hospitality

As Group General Manager, I represent the interests of the Connacht Hospitality Group, a local family owned company. The Group operates 5 hospitality businesses in Galway. There is no hiding from the devastation that the Covid-19 pandemic has visited upon the Hospitality Industry, there is no escaping the headlines and the reports. The headlines portray the impact on the wider Hospitality Industry in Ireland, and the adjectives used to describe the outlook are worsening by the week. 

On 17th March 2020, we all sat enthralled in front of our TV’s as our then Taoiseach, Leo Varadkar, addressed the nation. We applauded his Statesman like performance and his use of the Seamus Heaney quote struck a chord with the nation and we all played our part.

Little did we know that 10 months on, we would still be in the depths of our own Winter of discontent, with no Summer in sight. Would our industry still applaud the performance of our Government?

The intention of this article is not to undermine the seriousness of this pandemic or to diminish the scale of the challenge facing our health service professionals. The escalation in numbers in recent days is truly worrying. There is acceptance that Public Health guidance may necessitate further lockdowns, nobody can predict with any degree of certainty the trajectory of this pandemic. I am writing this to portray the reality for our business. A story which I believe will resonate with many. 

Where we were:

In 2019, we had 400 employees and our intention was to grow this number in 2020. We were operating 4 very well established businesses in Galway and had recently acquired the Galway Bay Golf Resort (November 2019). We had planning permission to develop a 4 star resort style property in Galway Bay, and were due to start this development in April 2020. The timeline was to have this property open by May 2021 with the creation of a further 175 Hospitality jobs. The construction phase of this development would also have supported approximately 100 jobs.

The Headlines & The Realities of Hospitality
Galway Bay Resort artist’s depiction

Connacht Hospitality Group’s contribution to Galway’s Economy:

  • €10M annual payroll generated in local community, we were on target to increase to €15M by 2021.
  • €4.5M in Food & Beverage Supplies, majority of which supported local suppliers.
  • €5.8M in Departmental & Undistributed expenses, which supported local enterprise.
  • Preparing to start €20M Hotel development in Rinville, Oranmore.
  • Completed €1M refurbishment project in The Connacht Hotel (January 2020), with a further €7.5M spent on Capital Investment projects since 2017.
  • Our hotel rooms accommodated over 200,000 visitors to Galway in 2019, generating further auxiliary revenue in the local community.

Similar contributions to local economies are replicated by Hospitality businesses across the country. We started 2020 in a growth mindset; we were focused on performance management & brand alignment. We were going to develop our business and invest in the development of our teams. Finance may fuel business, but people drive them!

Where we are:

It is fair to say, that like many Hospitality businesses, our focus has switched from performance management to crisis management, it is all about survival. Our employee numbers have reduced to 75, and we are in a state of uncertainty. The last 9 months and the roller coaster of lockdowns & restrictions has taken its toll on our business and on our teams.

As a business and an Industry, we were compliant and we will continue to be, we followed the guidelines. It is too disrespectful to those that work in the frontline of our health service not to.  There were opportunities to take on more business, the pent up demand was there. We turned away a significant amount because it did not meet the spirit of the guidance.

We are looking to the future with positivity, we are committed to growing back better. We are resilient and we will grow again, but the scale of the crisis is deepening, and our Government now need to stop the piecemeal approach and put in place a sustainable sector specific support package to show that there is a viable future on the horizon. Recovery will only come after acceptance of the scale of the crisis that we all face. The time for real Political leadership has arrived, the time to put the Country first!

Government Supports: 

The Government supports to date have been crucial, and if it were not for these supports, many businesses would already have closed permanently, supports included: 

  • EWSS and PUP schemes 
  • Warehousing of tax facility from Revenue
  • Waiving of Commercial rates 
  • Access to emergency Funding (€2 Billion pandemic recovery fund) 
  • CRSS scheme  

The headlines deal in big numbers, make great sound bites for our politicians, and possibly even score points for them. The reality for business is that they are not always as they appear. The headlines do not always match the reality!

I know our application to the pandemic recovery fund was not a satisfactory experience, even with a feasible business plan and the appointment of an experienced third party professional to facilitate the application. It was especially disappointing as our application supported the creation of 175 more jobs in Galway. If this is the experience of other Hospitality businesses, then that may explain the low take up numbers reported last week.

Our application to some of the other liquidity supports were not always met kindly, one of the main banks did not engage, but then they are in the middle of their own crisis.

We applied for the much heralded double payments of CRSS, only to find we did not match the criteria. 

The EWSS still incurs a considerable additional cost on businesses to protect employment, a cost that is extremely difficult to bear when the doors are closed. Subsidies need to be maintained at higher levels for all of 2021 and reviewed in October’s Budget for 2022.

The “Stay & Spend” scheme, the less said about this one the better. This scheme was widely flagged from the outset that it was doomed to failure by those in the industry, another example of where direct consultation with shareholders could have led to a more successful scheme. The money allocated for this needs to be repurposed for a simplified end user voucher scheme to support Hospitality businesses. It made a good headline though.

The reduction in VAT was broadly welcomed by all in the Industry, but the benefit will only be realised when we return to a better trading environment, not when our doors are closed. The reduction of VAT should be guaranteed for minimum 5 years post pandemic.

There have been many reports submitted to Government on what a support package should include for Industry. Proposals that have been submitted by many Federations & Associations, with input from many Industry experts. We support these proposals, and we believe that the current supports need to go further.

It will take a lot more than an additional bank holiday to help our beleaguered Industry. 

What next?

Our country faces a significant mountain to climb, the main issues of the General Election in 2020 still loom large in the background. Our Health Service, Housing & Climate change challenges still need to be solved and to do so will require significant investment. The Health Service is knee deep in this crisis but the true costs of the missed diagnoses of serious illness will only be recognised when COVID-19 has passed. 

The Billions involved in the NON-bailout of the banking sector (another December headline that might not match the reality), will not meet the stimulus that will be required to position us, as a country, for recovery. An unprecedented situation will require an unprecedented response. There are reports that the Government can access so called “cheap money”, if this is true, then they should do so at their earliest convenience and put in place an Emergency Budget.

  • The vaccines bring hope, a light at the end of the tunnel. Government need to prioritise the introduction of a cohesive strategy for the procurement and roll out the vaccines. Mobilise and fund the troops to support the speed and effectiveness of the roll out. Protect the most vulnerable in our society and allow us to hope again.
  • There are worrying reports of the potential impact of new strains of the virus, these are imported. Is it not time for Government to introduce imposed quarantined on arrivals into the country like the Australian model? I am sure you have all seen the updates on social media of Rob Kearney’s experience recently in Australia. Unfortunately, there will be no problem finding availability in hotels. 
  • Tourism to be put at the top table of Irish Politics through the introduction of a Senior Minister position with responsibility for Tourism & Hospitality Industry specifically, the current portfolio is too broad for one Minister. 
  • Introduction of an immediate Amnesty for tax liabilities arising to PAYE employees because of utilising wage subsidy schemes or accessing PUP, an Amnesty, not a delayed payment facility.
  • Access to Financial injection at favourable interest rates, with amount available commensurate with the size and viability of each business, not a one size fits all approach. Even with supports in place, there has been considerable cash burn in businesses, Working Capital will be essential to stimulate recovery.
  • Our Aviation Industry needs to be protected, we are an Island nation and rely on international visitors to support our tourism product. 
  • The support package introduced should include the provision of funding to allow Ireland to compete on a strong footing for International business post Covid-19. 
  • There should be a provision for Training & Development Initiatives that will ensure our Industry attracts talent into the future, consideration should be given to the re-introduction of a CERT style training model for people that would like to explore careers in the Hospitality Industry. 
  • Insurance Reform must be tackled once and for all. Operating in recent times has become more difficult due to persisting claim culture and Insurance premium hikes. If current practices persist, the trading environment will remain challenging for many.

In Conclusion:

Do not forsake our Industry, we are entwined into the fabric of Irish Society & the economy of each of our communities. Do not repeat the mistakes of past economic crises and leave an Industry on its’ knees and easy pickings for Vultures to swoop. If you do, then what have the supports to date truly been worth? 

We are an Industry that can play a vital role in economic recovery and would support a sustainable “living with COVID-19” plan. We need to protect our “Ceád mile Fáilte” and all that contribute to making Ireland a great destination, if we do, then our appeal will shine even brighter in a post COVID-19 world. 

I am speaking out because I want to be able to look my team in the eye and say I stood up for our interests & our livelihoods, as we are all in this together.

Yours Sincerely,

Wayne Neilon,

Group General Manager,

Connacht Hospitality Group

 

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