ORHMA on Impact of COVID-19 to SMEs in Hospitality Industry

On Tuesday August 18, 2020, Tony Elenis, President & CEO of the Ontario Restaurant Hotel & Motel Association (ORHMA) spoke to the Standing Committee on Finance & Economic Affairs on the impact of COVID-19 to the small & medium-sized businesses of the hospitality industry.

There is no doubt that the hospitality industry needs sector specific focus and support in order to recover as well as contribute to job growth and the economy overall.

Labour & Workforce

When compared to July 2019, the Employment Report of July 2020 is showing 156,000 hospitality industry workers have not yet returned to work. This is more than half of Ontario’s hospitality workers and is the highest variance in Canada among all the sectors. The next closest Ontario sector is only down 46,000 workers. This number does not only represent the current dismal business reality but the urgency to defer the temporary Employment Standards Act layoff extension deadline of Septempter 4, 2020 to a period where hospitality is stable and sustainable. The extension was previously enacted through the Infectious Disease Emergency Leave provision. Not extending the date will lead to severances being paid that will bankrupt many small and medium sized hospitality businesses.

Rent

The liquidity crisis for business is real and both hospitality operations and municipalities require an effective mechanism to address the burden of rent as the Commercial Rent Assistance Program (OCECRA) is not working.

Property Tax

We need to implement a workable formula for property tax knowing this is a a complicated topic. A regulatory change needs to be enacted to permit the deferral and remittance of 2020 property tax obligations without penalty and interest free over the grace period granted. A further 25% reduction should be granted in the education portion of property taxes. A retroactive assessment of hospitality properties should be done otherwise Ontario hospitality operations will be lining up to go through an appeal.  A provincial fund for municipalities to access should be established as an offset for the corresponding decline to their revenues.

Beverage Alcohol Fees

We recommend a minimum of 20% reduction in beverage alcohol fees. This is measurable, tangible and well targeted enabling significant support for a restaurant’s ability to recover and keep the door open.

Beverage Alcohol Delivery & Patio Extension

ORHMA applauds the provincial and municipal governments including support from the AGCO in cutting red tape by moving swiftly to permit delivery of beverage alcohol with food and extend outdoor patios for restaurants. These are outstanding case studies of how meaningful red tape can be taken away. This brings up the questions of why we could no do this in pre-pandemic crisis and why these rules are only temporary. Let’s be honest the sky has not fallen with these initiatives in offering huge support for business, a good experience for customers and helping government revenues.

Beveral Alcohol Delivery

We strongly recommend to make the delivery of alcohol with food permanent as there is no sensible rationale against this.

Patio Extension

Furthermore, there should be a consideration of the extension of patios to be permanent where it can work to further carry on the vibrancy this service provides while supporting small business. With limited capacity and higher costs to meet safety standards the sector should also be receiving some form of government subsidizing especially related to indoor equipment that create a safer environment to staff and builds trust with consumers.  

Source: ORHMA

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