Holiday sector could benefit from ‘staycation’ boom

The holiday park and caravan sectors have the potential to benefit from a possible ‘staycation’ boom in the UK – if they approach the opportunity correctly.

Adam Parton, partner at MHA Moore & Smalley, said if lockdown measures continue to ease, there will be opportunities for leisure facilities which can offer safe holiday destinations to British tourists.

Adam, an advisor to tourism businesses across the region, believes holiday and caravan parks could potentially benefit thanks to the amount of green spaces available at such destinations and the relative lack of shared spaces. Likewise, he also expects a resurgence in ‘glamping,’ tent and cottage holidays for the same reasons.

However, Adam warns that to attract customers, these destinations will need to go out of their way to showcase how they are ensuring visitor safety – including such methods as a cleanliness rating.

He said: “The leisure industry is planning for an easing in the lockdown rules to allow for UK holidays to take place, possibly from July 4.

“There is clearly some uncertainty over how this year will play out, but we are certainly expecting domestic tourism to bounce back strongly in 2021, so the next few months will be a way for the sector to at least dip its feet in the water and begin to understand what works and what doesn’t.

“Organisations including the BHHPA (British Holiday Home Parks Association) are lobbying the Government hard to illustrate the safe options for holidaymakers within the UK, pointing out that outdoor activities are already regarded as safer – ideal for holiday parks, caravans and camping facilities.

These kinds of destinations may be able to illustrate safe reopening quicker than hotels, for instance, and we’ll likely see them become opportunities for family and extended families – depending on how far the lockdown is relaxed – to get together.

A lot will depend on how these facilities can be opened safely – how they can create and maintain social distancing and how this will affect communal areas and the safe functioning of onsite facilities such as shops, cafes and washrooms.

I think we will begin to see tourists interested in knowing these details in the same way they would previously have looked at what leisure facilities were available, and whether there was onsite WiFi.

Adam said that many businesses will already have plans in place for reopening safely, but will be looking to the Government for guidance.

Currently, July 4 is the earliest likely date for reopening of campsites and similar facilities, but only if the Government’s tests have been met regarding factors including the numbers of Coronavirus infections and testing rates.

Adam said: “If it is safe to do so, these facilities should be opening when they can, to provide employment, support the companies which operate them, and to give the UK population the chance of a break from the current situation.

“Now that the lockdown has begun to ease somewhat, we will be watching with interest to see how the situation progresses over coming weeks.”

For further information on the content of this blog, please contact Adam Parton on 01524 62801 or email adam.parton@mooreandsmalley.co.uk

What can I do to mitigate the risk to my business risk from Coronavirus?

The UK is only just starting to feel the effects of the global Coronavirus outbreak and it is very difficult to foresee how this will develop over the next few months, however, businesses should start to consider the potential impact and how they can mitigate any negative effects.

Leisure and tourism businesses are particularly likely to see a direct impact from the outbreak due to them dealing direct with the general public, so, it is important to plan for the potential negative consequences that may arise in the short term but also look at how to potentially benefit as time progresses.

A sensible starting point would be to either prepare or update your cashflow forecast for the next six months, thinking carefully about the income you are predicting in this period. This will indicate what actions you need to take; if it appears that cashflow is becoming strained during this period then you could consider the following actions:

  • Talk to your bank and alert them to your concerns and ask what assistance they are able to give, which may form either a capital repayment holiday for loans or increased overdraft facilities.
  • Talk to other finance providers, such as credit card providers, asset finance providers etc and see whether there is the option of reducing or delaying payments.
  • Approach major trade related creditors and see what flexibility they may have in terms of reducing or delaying payments
  • Open dialogue with HMRC regarding deferring tax payments that may be falling due, perhaps splitting your quarterly VAT bills into 3 monthly payments.
  • Review your terms of business in relation to the sales you make to your customers and ensure that your staff are fully aware of what they say to ensure that refunds are not issued for cancellations if your terms do not offer refunds.
  • Look at your insurance policy carefully, are you insured for any business interruption that may be caused?
  • Think about what benefit you can derive from the situation, for example, if you are selling UK based accommodation, can you drive demand from people who are may be cancelling overseas holidays?
  • Consider your stock levels carefully, do you need more or less of certain stock?
  • Think carefully about your investment plans, do you still want to follow your original plans or reconsider?
  • Look carefully at your sick pay and absence policies for your staff. Put together a plan of how you could ask your staff to work from home if they need to self-isolate, this might work for any finance and admin staff but naturally will not be possible for front of house and kitchen staff.
  • Consider how you will be able to continue to operate if you were to have significant levels of staff absence and sickness.
  • Enforce stringent hand washing policies to keep staff and customers as safe as possible.

Government support

In light of the current situation, the Government has announced a package of support for businesses ranging from supporting SMEs with payroll costs to the creation of temporary loan schemes. Summary of the main support packages announced to date.

The picture is ever changing, and it isn’t clear how matters will develop. It may not be necessary to implement any changes at this time; however, we would always advocate considering the potential impact on your business and where applicable having some exploratory conversations as noted above as soon as is possible. If you would like further advice on the above, please do not hesitate to get in touch with Colin Johnson.

National Minimum wage compliance

All employees over the school leaving age in the UK need to be paid over the National Minimum Wage (NMW). The hourly wage depends on the age of the employee and for over 25’s is currently £8.21 per hour. HMRC are carrying out increasing number of NMW compliance visits to ensure employers are adhering to minimum wage legislation, and the hospitality industry is one of the sectors which is being targeted due to the number of employees in the sector who are paid around the NMW level.

NMW legislation in its most basic form is pretty simple to implement. It becomes far more complicated where staff wages suffer deduction prior payment for the services they receive from their employer, such as the provision of accommodation or cleaning of uniforms, which are commonplace in the sector and it is vital that employers are aware of these interaction of these deductions with NMW requirements.

Employers are increasingly being caught out where they make deduction from wages for costs that they may have generally thought have nothing to do with NMW, such as the repayment of a short term loan, settling of a bar tab or deductions for breakages as in some circumstances these types of transactions can take an employees pay below NMW and cause the employer significant issues with HMRC.

Many NMW investigations are launched when a disgruntled employee reports their employer to HMRC and in 2017/2018 HMRC reported that they had identified £15.6 million of minimum wage arrears benefitting in the region of 200,000 employees through investigation.

If an employer is found to have underpaid NMW, even if it is due to a technicality the penalty regime in this area is severe and HMRC also “name and shame” employers for severe non-compliance.

A PAYE audit can help highlight areas of non-compliance and help address issues before they are picked up by HMRC and all employers are encouraged to review their procedures.

If you would like more information on this subject please contact Colin Johnson or call 01772 821021