The pub at the end of Neil's road had a bumper festive season, boasting that they took more than £300,000 in a four week period (most of it on some very average house wines and selling water with a bit of Coke flavouring mixed in for more than three quid a shot).
However, when the tinsel came down and the balloons deflated to small plastic blobs on the sticky floor, reality appears to have intervened. Reports in today's Times (Monday 16 January) state that many landlords and owners of hospitality venues around the country are considering their best approach to bank managers who will, come the spring, be looking for the first repayments on loans taken out under Government busieness loan schemes. When searching for grubby bits of paper chain and streamers in the corners of their establishments it seems they have found ticking time bombs, putting the fear of God up them.
Like many others, the leisure and hospitality sectors availed themselves of our beneficence, via the Government, by way of Bounceback, CBIL and large business interruption loan schemes (going on £30 billion worth of them), during the pandemic and have left letters containing the terms and conditions of repayment by their oft-ringing tills. The debt was interest free for the first 12 months, but now the pipers are at the back door requesting their dues and, despite the cost of a pub sausage appearing to increase from £3 to £15 over the past two years, it seems many do not have the wherewithall to start making repayments.
It was part of the deal that banks must 'grant forbearance' to borrowers when seeking to get their money back under the Bounceback scheme, but those who took out other types of loan are left to practise awkward conversations in front of the mirror in the ladies before facing their bank managers and other lenders.
Kate Nicholls, chief executive of UKHospitality said: “I think it’s a ticking time bomb and particularly for our sector, which is much more indebted than other areas of the economy. Other sectors have been able to start paying off those loans that they took out as a precautionary measure, but hospitality really needed those loans to be able to get by and have that working capital."
We understand this, Kate, and empathise. However, if you take a look out of your doors and up-and-down the high street you will see many others suffering the same or similar issues. We also get that strikes and the cost of energy and expensive supplies and the cost of living crisis pose other questions for your members. However, isn't it time to stand up as a sector and individuals within it and show genuine business ingenuity and innovation to lead the way to recovery (with a glass of semi-bad red wine in your hand)?
At least the hospitality sector doesn't have to deal with the 'buy now pay later' craze, which allows users to defer or divide payments into instalments. Of the 18-24 year-olds surveyed by UK-based financial education charity Centre for Financial Capability 54 per cent expect to take out a loan of some sort next year. Almost 20 per cent of over-65 year-olds say they have either used such products or plan to do so over the next 12 months.
The struggle goes on.