PwC report finds 75% income support & working capital are key for survival of Ireland’s hospitality sector amidst Covid-19 crisis

Covid-19 has caused problems for businesses in Ireland and thankfuly I am one of those who is able to work from home. But what about those who can’t work from and whose jobs are at risk?

One of the sectors badly impated is Irish Hospitality as Covid-19 has created an emergency situation within Irish Hospitality with the near closure of the entire industry which covers hotels, restaurants and pubs. The sector is a key component of the Irish economy worth up to €7.6bn annually, representing up to 2.3% of GDP, and employing 180,000 people, notably across all regions.  While final data is not yet available, approximately 100,000 people may have already lost their jobs in this sector, with countless more indirectly affected.

By way of helping the national effort and providing some proposed alternative support measures, a new report by PwC ‘Covid-19 and the Irish Hospitality Sector – Impact and Options’ published today helps identify key proposals to protect employment and businesses across the country.  The report identifies two step-change actions with most effect:

Firstly, to step-in and keep employees in the sector in their jobs – covering 75% of the net take-home pay of employees in the sector, having a net additional cost to the exchequer of €2.4m per week when compared to the €203/week unemployment payment,  and

Secondly, to provide an interest-free loan mechanism to provide working capital for the industry to restart itself post Covid-19.   The report reveals that unsupported, a business in Ireland’s hospitality sector could take up to 62 weeks from the onset of a Covid19 closure to return to profit and recoup losses sustained during the closure period

Owen McFeely, Director, PwC Ireland Retail & Consumer Practice, said: “These proposals are aimed at being constructive and supportive to the efforts Government is already seeking to provide at this vulnerable time. Hospitality is core to our DNA and goes to the heart of brand Ireland. Without major step-in supports, we will see significant human, economic and societal stress, particularly for areas outside the Dublin region where hospitality is often the cornerstone of local communities.”

“We recognise that this is a significant action over and above current supports, however, bold steps are necessary now to ensure that we do not have a delayed recovery. To avoid or alleviate the damage of another recession, it is simply essential that employees are ready to go back to work when this situation eases.  This isn’t just about the hospitality industry, the options and suggested framework identified in this report can easily be applied to other sectors and industries.”

This PwC report argues that bold and early action will ultimately be positive and impactful on both our economy and wider society.

John Dillon, PwC Ireland Retail & Consumer Practice Lead, said: “A subvention based approach as proposed allows businesses to remain connected with their employees. This will be critical to enabling the sector to mobilise rapidly and transition to post-COVID realities once current social barriers are lifted. It ‘flattens the curve’ economically. The hospitality sector, supported by Ireland’s food industry, has spent many years developing Ireland’s image and reputation as a unique destination for food tourism. Failure to support key players including Restaurants, Hotels and Pubs and the wider ecosystem including local farmers and producers could do irreparable damage to the long term future of the industry.”