Entering the virus twilight zone...

THINK fondly, for a moment, of your favourite restaurant or cafe. If it’s family-run or owner-operated from rented premises you’re not going to be eating there again if it becomes a permanent victim of the coronavirus lockdown.

Guernsey restaurants will struggle to make money with seating restricted to allow for social distancing, as in this one in Bangkok, Thailand. (Shutterstock picture)
Guernsey restaurants will struggle to make money with seating restricted to allow for social distancing, as in this one in Bangkok, Thailand. (Shutterstock picture)

What’s that, you say? How can it just disappear? They’re lovely people. We always eat there. Of course they’ll make it – people are just itching to book a table, wait and see.

There are two problems with that. Firstly, being closed doesn’t mean pubs, hotels and restaurants stop losing money. They’re still paying wages, standing charges to utilities, clearing supplier invoices and maintaining the premises. And paying rent. Not opening is different to mothballing and the Peninsula Hotel, for example, is currently burning through about £5,000 a week NOT to open.

And even if your regular haunt opened tomorrow, would you go? Despite social distancing, if you’re over 65 or with an existing condition, being close to other people may well be a risk you don’t want to take.

But if you do decide to venture out, few if any hospitality venues can make money on severely restricted seating. They’re high volume, low margin operations. That’s why they’re hurting – along with retail, but that’s another story – and want some clarity on when they’ll be able to open properly.

The uncertainty, Ian Walker from the Little Big Hotel Group tells me, is particularly damaging because they can’t plan ahead and they can’t recoup losses if social distancing requirements come in. As he puts it, ‘Spacing rules will undoubtedly push many businesses below their break-even point.’

This matters because hospitality contributes significantly to the island’s economy – around 2% of GDP, rising to 4%, when suppliers etc are taken into account. That’s 2,000 people directly employed, representing 174 individual businesses and most of those operations (74) employ two to five staff.

States members know all this, because they received a letter from Mr Walker on behalf of the main players in hospitality outlining survival proposals for the industry.

But with a small handful of exceptions, States members have ignored him.

Yet the problem facing hospitality is also hurting government.

The airport, in a good year, loses about £2,300 a day. But that’s on revenues of £12.3m. and more than 808,000 passengers using it annually. Effectively closed, what’s it losing now? £200,000 a day?

The point is that you can do a similar exercise with many other economic sectors experiencing similar hardship, which is why we’re now entering an even more precarious phase of the Covid crisis – how and when we reopen Guernsey’s borders.

States members generally have fallen out of love with hospitality (well, most business actually, but that’s also another story) but it’s of crucial importance in maintaining sea and air routes, those same links many complain are already inadequate.

I’ve no idea how much the crisis has cost the new owners of Condor Ferries but not only have passenger services ceased, freight carryings are also substantially reduced. Aurigny, for example, was making an operational loss of five grand a day in 2018 on passenger revenues of nearly £42m. a year, which is why it’s been given another £30m. to tide it over.

But, like hospitality, for how much longer? Policy and Resources has already said that it cannot keep every business going. The longer the restrictions last, the fewer will be saved.

Without wishing to be alarmist, what will be left if restrictions on free movement (including into the UK) continue into next year? Guernsey restaurant food used to be a joke. Now it’s award winning and a reason to come here.

But that depends on an ecosystem of talent, establishments, customers, suppliers and wine merchants and the shippers who supply them. The longer the pandemic lasts, the more in jeopardy it becomes.

As Mr Walker puts it, ‘The worst possible scenario for hospitality would be the “perfect storm” of furlough ceasing, hospitality opening up, but social distancing rules imposed… this toxic recipe would immediately translate to mass redundancies and the permanent loss of hundreds of jobs. This would be economically and socially devastating for Guernsey. Blood will flow in our industry: 50% of customers, 100% of costs.’

Will the Guernsey taxpayer, in the accepted phrase, do whatever it takes to keep the sector afloat? Or let it take its chances and accept the consequences?

This is why I say we’re now entering the most difficult phase of responding to the pandemic. Effectively, the virus is under control and Guernsey is itching to get back to work and normal life.

Most of us could do so tomorrow, with no need to social-distance at Waitrose or Alliance or wherever. But that’s dependent on no fresh cases being brought to the island and therefore continuing to crush hospitality until a vaccine is available.

To date, we’ve been happy to follow advice from Dr Nicola Brink, our reassuring boffin and guardian angel. No new cases, hospital empty, unemployment figures rising and business closing… now that’s a different matter.

When does unswerving acceptance of government advice morph into dissatisfaction as the economic consequences become all too apparent and a majority of the island looks at the infection figures and decides they’re no longer at risk?

Put it another way. If the price of keeping us safe from future outbreaks of Covid-19 is maintaining border security, what moral and ethical obligation do we have to those individuals and businesses who can’t operate under such restrictions?

How much extra tax are you prepared to pay – or civil service jobs and public services to lose – to recompense those paying the price for keeping you Covid-free?

That’s why this is such a crucial next phase of dealing with the virus outbreak. To date, decisions taken by the Civil Contingencies Authority have been (without diminishing them in any way) pretty straightforward: protecting public health.

Balancing controlling the outbreak in future with the impact on business and the economy, plus keeping the drain on public finances manageable, will be immensely more challenging.

Phase two of the response means entering a twilight zone where there are no obviously right or wrong decisions or answers – but whichever direction is taken will have life-changing implications for large numbers of us.

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