Taking stock
The Covid-19 pandemic is a truly unprecedented event but when we come out of the other end, there will be an assessment not only of the medical response to the emergency but the decisions that individual businesses and industry sectors made.
Mike Ashley’s decision to keep his Sports Direct chain open and lobby the PM that his was an essential business was quickly reversed but not before a barrage of criticism on social media. Airbnb allowed ‘hosts’ to continue to promote accommodation as ‘Covid-19 retreats’ to widespread disgust and then overrode cancellation policies waiving fees, upsetting both ends of their business model within a few days.
The governments financial support package has been well received and has provided welcome relief to businesses that are currently mothballed and waiting to reopen.
The Job Retention scheme package allows businesses to retain their most important asset, their staff, until the lock-down is lifted and distancing measures eased.
Despite some initial implementation issues, when the banks seemed to be putting profit before support, the CBIL scheme now seems to be working more effectively and businesses are expecting funding before the end of the month.
However, welcome as these initiatives are, they still leave businesses exposed and short of cash. Although payroll for furloughed workers will, in time, come from government there are still key workers to pay. The loan scheme will provide liquidity, interest free for the first year, but it is still debt and will need to be paid back within six years.
The sector that has been absent from any form of support for hotels is Insurance.
Insurers have claimed that the pandemic does not fall within their Business Interruption cover and have refused to recognise the disease or the associated restrictions.
In a survey of over 50 Best Western hotels, all have made claims and two thirds have been rejected with the remainder waiting to hear back but advised they will not be successful – not one has been successful to date.
The clause most applicable to the issue is Restriction of Access which states that payments will be made for loss of income where access is prevented by order of government.
This could have been written for the current crisis, but insurers are saying that this was never meant to apply to ‘social distancing’ advice or a nationwide lock-down.
Come on insurers, we have paid premiums in good faith for year after year, and when we need your support you close ranks and rely on your biased interpretation of the small print.
My own business interruption cover amounts to £50K, which is less than three months of my key worker payroll during hotel closure. In the meantime, any cash surplus has been eroded through the payment of suppliers and the complete stop on any income.
Hotels around the country are looking to the future and taking a flexible approach to their customers, refunding pre-paid accommodation because the hotel is now closed or extending wedding bookings to allow personal finances to recover. We understand that when we come out the other end of this, we need to be seen to have done the right thing and supported our customers.
The insurance companies need to think again and support their customers through this crisis, or their customers might not be there on the other side. There will be a resetting of many relationships after this and at the moment insurance providers are on the wrong side of the line.