Hospitality in 2021: Restaurants buckle under the strain of Covid restrictions
As a challenging year in the hospitality sector comes to an end, a leading restaurateur has warned that a fifth or more of the island’s eateries could close in the first quarter of 2022.
Dennie O’Connor, whose properties include the iconic White Horse restaurant and pub in the town of St George, said he told his employees just before Christmas that staffing levels would be cut from 36 people to 14 on January 2.
He said: “Strange to say this but the worst of 2021 doesn’t finish until the start of spring of 2022 as our season (financial year) is to April 1.
“January, February and March will be an unbelievable struggle.”
Mr O’Connor added: “We have learned very clearly this year that the smaller your business is, the harder you have to fight for survival because ‘credit’ doesn’t exist and everything is cash on delivery, while bigger companies have 90 days and get priority on goods.
“If government doesn’t continue to help, landlords and banks continue to understand, at least 20 per cent more restaurants will be forced to close their doors in the next three months.
“The industry will recover, we just have to continue holding on but realistically restaurants are at least two years out from seeing any profits.”
Mr O’Connor was speaking at the end of a year during which the hospitality sector in Bermuda proved to be anything but hospitable for many of its business owners and staff.
The island’s hotels struggled in the face of lagging tourist numbers because of Covid-19, while restaurants and bars missed the international trade that a regular parade of visitors provides while also facing the lock downs, reopenings and restrictions that have affected local custom since the pandemic began to impact Bermuda in March of 2020.
Stephen Todd, Chief Executive Officer of the Bermuda Hotel Association and the Hotel Employers of Bermuda, said 2021 was “an extremely challenging year given the adverse effect and ongoing challenges which the pandemic has presented”.
The challenge, he said, was the island’s “ability to attract international visitors given the impact on our core international gateway markets” of the United States, Canada and the United Kingdom.
Also having an impact, he said, was the Centre for Disease Control in the United States temporarily assigning category four status to Bermuda as the result of a significant rise in Covid-19 cases on-island.
The 600-room Fairmont Southampton hotel remained closed, which Mr Todd said not only reduced overall hotel room inventory, but in particular hurt the island’s ability to host group business.
On the flip side, the five-star St Regis Bermuda Resort opened in St George’s, adding 120 rooms to the island’s inventory, which now stands at just under 2,000 rooms.
At the height of the pandemic, Mr Todd said, the hotel industry on-island had shed 2,200 jobs, but more than 1,500 of those jobs have been restored – the approximate difference remains the jobs lost at the Southampton Princess.
Mr Todd said the occupancy rate of BHA member properties this year will be approximately 30 per cent, compared to a normal year occupancy rate in the high 60s or low 70s.
He said: “That is significantly lower than we would like it to be.”
But it was not all doom and gloom in the accommodation sector.
Three years ago, John and Alison Young revived The Ledgelets, a cottage collective in Sandys Parish.
The couple has been operating the seven-unit property as a hybrid residential rental and tourist attraction, with two cottages reserved for visitors to the island.
Mr Young said: “I would describe 2021 as ‘night and day’ from 2020.”
He added: “We struggled in 2020; we lost a lot of business.”
After returning a “lot of deposits” when the island first went into shutdown last year, Mr Young said The Ledgelets had monthly occupancy rates of between 50 and 81 per cent from May through September this year.
He said holding rates at 2019 levels was “a draw” for visitors.
Mr Young said: “In general, it was a nice recovery year for us as a smaller property.”
He added: “We saw a nice pick-up in the summer time, we saw a lot of families and saw longer stays because of the testing regime – people stayed longer to make it worth their while.
“There was also a good mixture of local business, including two weddings.”
Mr Young said a family of four from Norway, who were referred to the property by local residents, is staying at the collective through the holidays.
He said: “Locals have been very good to us. 2021 was good a lot because our locals were good to us.”
Reviewing the year, Mr Young said 2021 “felt like 2018 and 2019 again”.
He added: “We have good numbers on the books for next summer. I feel good about 2022.”
Restaurants and bars continued to be hard hit this year by the impact of the pandemic.
Philip Barnett is president of the Island Restaurant Group which operates Pickled Onion, Frog and Onion, Barracuda Grill, Brew, Dockyard Brewing Co and RG Catering.
He said 2021 was “still incredibly challenging – the reality is the stress and impact of Covid, and (downturn in) tourism to Bermuda has definitely impacted us disproportionately, (compared) to many other businesses in Bermuda.
“That is obviously causing a very difficult environment for us to even think about breaking even.”
Mr Barnett said the loss of local and international business visitors has had a disproportionate impact on fine dining restaurants as opposed to quick service and takeout eateries, which have “not seen much difference in revenue levels”.
He said revenue in 2021 was “totally dependent on the type of restaurant you have”.
The Frog and Onion, in Royal Naval Dockyard, was hit hard as it is dependent on the business of cruise ship visitors, whose numbers this year were less than five per cent of those in 2019, Mr Barnett said.
He added: “If 95 per cent of your usual revenue source is not on the ground and running around Dockyard that will have a significant impact on business.”
Since business flows normalised with the end of lock downs, Mr Barnett said staffing levels have been maintained this year, or have slightly increased.
In addition to the White Horse, Mr O’Connor is the owner of the Beach Boys facility at Tobacco Bay, and co-owner of Snorkel Park and Bermuda Travel Concessions, which operates the airport venues Rock & Barrel Gastro Bar, The Heron and the Sea Public House, and Whistling Frog Rum Bar & Grill.
He said: “As an owner of multiple restaurant businesses, 2021 has definitely been a year filled with ups and downs.
“If I have learnt anything from this pandemic, it is that the recovery will be more like a marathon, and not a sprint.
“We have had a tremendous outpouring of support from the local community which we greatly appreciate and value.
“But the truth of the matter is it’s impossible without a steady tourism season, government support, and a decrease in the skyrocketing price of goods.”
Mr O’Connor added: “We’ve had to get very creative to simply compete/survive.
“Our High Notes on the Harbour concert supported by the BTA series was a wonderful addition this year that garnered a lot of support and drew a crowd.
“We hope to continue with new and innovative ideas that make your dining experience just that, an experience.”
But he added: “The journey back to normalcy is going to be a marathon. With new variants, threatened tourist arrivals, staffing shortages, and increasing prices of goods, it feels like the cards are stacked against us.
“However, we have amazing support from the community which we love and value so much. Dining out provides food for nourishment, but also feeds our hunger for social interaction.”