Hotel industry desperate for government clarity

The nation’s politicians are failing the pub test, exposing thousands to imminent job losses and business to financial carnage.

Matt Mullins, owner of The Espy hotel in St Kilda and other Victorian pubs, says the industry needs help to survive. Picture: Aaron Francis

The nation’s politicians are failing the pub test, exposing thousands to imminent job losses and business to financial carnage.

Hoteliers are demanding both tiers of government end the standoff over compensation and restrictions and unite to prevent thousands of jobs being lost and a new wave of businesses imploding after the end of JobKeeper.

New figures show for the first time the extent of the hit on the industry in 2020, with a drop of 30 per cent in draught beer sales compared with the previous year, including a $1bn fall in sales.

The numbers for the first two COVID-19 lockdown months of April and May last year show that sales volumes through pubs and clubs fell by a staggering 94 per cent and 96 per cent.

That catastrophic result, reported by the Brewers Association of Australia, does not take into account the millions of dollars borrowed by hoteliers to keep their businesses afloat and the drastic impact of current COVID-19 rules, which in many cases cut patronage by 50 per cent.

This 50 per cent rule, which equates to one person per two square metres, threatens to destroy businesses across Australia because it slashes hotel revenue to an estimated half, making many businesses unviable, particularly those in the Sydney and Melbourne inner city areas.

An estimated 100,000 accommodation and food service staff are still on JobKeeper.

The impact of the 50 per cent rule, without government support, is likely to be intergenerational, with forced closures throughout the country, but particularly in once prime city locations.

Industry leaders are pleading for a range of relief measures including wage subsidies, fringe benefit and land tax relief or for governments to open up hotels to more patrons in the context of low to zero COVID-19 cases.

Matt Mullins, part owner of nine Victorian hotels including the landmark Hotel Esplanade in St Kilda, has stressed owners are acutely aware of the danger of the virus but said governments needed to understand their policies were driving businesses and staff to the financial wall.

Mr Mullins said the Victorian government’s decision to increase to 75,000 the number who could attend the MCG for football had perplexed many, when businesses were struggling to keep going.

“If you’re going to tell a business that you cannot trade beyond, say 50 per cent, you have to support us,” he told The Weekend Australian.

“We are not looking for handouts, we are not looking for corporate welfare, the conditions are unprecedented.

“We need help to survive.”

The industry thinks there is a standoff occurring behind the scenes between the two highest tiers of government in Australia, with Canberra and the state and territory governments refusing to acknowledge the contradictions in the arguments: the states preventing hotels from opening to capacity to prevent spreading the virus, and Canberra refusing to acknowledge the impact of the state decisions.

The knock-on effects will be profound, with brewers concerned that once thriving pubs will struggle to survive, undermining the futures of those who make the beer.

“These figures for 2020 show just how much beer sales dropped in our pubs and clubs and, most importantly, they show that the slight increase we saw in retail did not fully offset this,” said Brewers Association chief executive John Preston. “We have seen claims in the media that alcohol consumption increased during COVID-19 but this data clearly shows this was not reflected in beer sales.

“Brewing is a critical industry in Australia employing 13,500 people directly, supporting a further 100,000 jobs through our supply chain, contributing nearly $3bn in tax every year (or $58m per week) and making an overall contribution of $16bn to our economy.

“It is absolutely vital we take steps to support recovery in our hospitality sector.’’

The Australian Hotels Association is demanding tax and council rate relief and a possible $500 a week job payment as part of temporary, targeted job relief.

The impact of the COVID-19 restrictions is particularly dire in Victoria, which suffered lockdowns for most of last year, according to AHA Victorian chief executive Paddy O’Sullivan.

“We are concerned that at the end of March, a number of support measures will no longer be available to Victoria’s pubs and hotels, and with continuing COVID Safe restrictions in place, it will be very tough for them to meet their rising business costs. JobKeeper will cease and deferred rent payments are due and payable,” Mr O’Sullivan said.

AHA national chief executive Stephen Ferguson said the rules affecting pubs were changing relentlessly and one of the key problems was that there was a big schedule of fixed costs that was difficult to recoup when only 50 per cent of normal patrons could attend a premises.

A spokesman for Josh Frydenberg said the government had provided $7.8bn in JobKeeper payments to the hospitality and accommodation sector.