Pleas for Assistance as Hospitality Revenues Down 25%

Share on facebook
Share on twitter
Share on linkedin

Australia’s hospitality industry is calling from added government assistance as they grapple with the 25% drop in revenue from the coronavirus pandemic. 

The numbers come from IBISWorld, a market research group that says that hospitality revenue has dropped from $19.7 billion in 2018-19 to $15 billion in 2019-20.

This drop in revenue has been compounded by data from the Australian Bureau of Statistics showing that more than one-third of food, drink and accommodation service jobs were lost between March and April. 

In May, Scott Morrison announced Treasury estimates that 441,000 jobs in total were set to be lost in the hospitality industry. 

In the U.S. there has been a similar call from the National Restaurant Association, who is advocating for a $240 billion stimulus package for the industry. 

Chief executive of the Restaurant and Catering Australia (R&CA) industry group, Wes Lambert has warned that more closures and job losses were likely, calling on the government to offer more support to the embattled sector. 

As it stands, the government’s JobKeeper package is slated to end in September. We reported last week that Deloitte had warned of the potential impact of too many support packages ending at the same time. 

“That’s normally when hospitality and accommodation businesses would have seen the start of their season,” Mr Lambert told the ABC’s RN The Money.

“With the international borders closed and 30 cents on every dollar in accommodation and food service coming from international tourists, we certainly will not see a recovery until 2021,” he added. 

“We certainly could see a landscape where anywhere from 10 per cent to 20 per cent of restaurants close permanently.” 

According to research from consumer analytics group Illion and AlphaBeta, the public is spending increasingly more on home delivery, in spite of the fact lock-down measures have widely been lifted. 

Currently, Wes Lambert’s industry group, R&CA is lobbying the government for added support for the hospitality industry. Specifically, the R&CA is hoping for added stimulus packages and a relaxation of the Fringe Benefits Tax, which would make business meals a tax deductible expenditure. 

The industry body is also hoping to see modifications to the GST model.

“The Treasurer himself figured out that they had underspent by $60 billion… let’s not hold back on that $60 billion, let’s keep that flowing out to the most affected industries,” he said. 

“The ATO allows businesses to have in-house meetings where the food is ordered from a restaurant or a caterer and brought into the business. That’s deductible,” he said. 

“However, if the people go to the venue, sit down and have the meal in the venue, it is not.” 

The R&CA is calling on the government to modify its existing model, which Lambert says will help businesses “make more deals,” while giving bars and restaurants revenue they desperately need. 

In terms of modifying the GST model, RC&A is hoping that the government will allow restaurants to add GST on top of its listed prices. 

“Right now when you see a menu price, it is actually 10 per cent less to the business because the GST is included in the price – so instantaneously those businesses will see a rise in cash flow,” Lambert said. 

Mr Lambert also warned of the impact of the public’s dining habits changing dramatically, pointing out that “dining is intertwined with the culture in Australia.” 

“Many businesses… continued to do their takeaway coffees and food and, when able, started delivery so that they could continue to be a part of consumers’ and diners’ lives through the crisis.” 

“Diners’ habits have changed… businesses need to embrace this change and maximise their revenues within that changed culture,” Lambert concluded. 

Don’t forget to check out our News page for regular updates, industry news, how-to guides and ISO-explainers. 

Hospitality revenue down
Bars and Cafes have seen their revenues drop by 25%

Subscribe to our Newsletter

Share this post with your friends

Share on linkedin
Share on facebook
Share on twitter
Share on google