Businesses in survival mode need long-term government help, says advocacy group
Hotel owner says occupancy rate has fallen to single digits, requiring sweeping cost-cutting measures
A group that advocates on behalf of business leaders in a wide range of industries in Newfoundland and Labrador says many companies are in survival mode, and their long-term viability will hinge on the level of help provided by governments.
"There is significant concern over the ability to survive this," Richard Alexander, executive director of the Newfoundland and Labrador Employers' Council, told CBC on Wednesday.
Alexander said the health and safety of workers is the No. 1 concern for business owners in this era of social distancing and strict public health protocols aimed at preventing the spread of the coronavirus.
He said businesses are listening and respecting the message being delivered by public health officials.
Flow of cash being strangled
As such, companies deemed non-essential have closed their doors and sent large numbers of workers home, while those allowed to remain open have taken dramatic steps to manage their costs and stay afloat as consumers remain in their homes.
As a consequence, Alexander said, the flow of cash to and among businesses is being strangled.
"Without sounding alarmist, businesses are taking steps to be able to survive," said Alexander, "by doing whatever they can to keep as much cash in the business."
One company trying to manage its way through the pandemic is Clayton Hospitality, which operates the Comfort Hotel in St. John's, the Comfort Inn in Gander and the Quality Hotel in Clarenville.
The company has laid off 40 employees, and is now operating with a minimum number of staff at a time when the occupancy rate has fallen into the singe digits.
Layoffs with a 'heavy heart'
Co-owner Judy Sparkes-Giannou said hundreds of thousands of dollars in business from meetings, conferences, business and leisure travel has evaporated.
"I've had a heavy heart having to make some of those choices," Sparkes-Giannou said of laying off employees, some of whom worked for the company for more than two decades.
"It's a very small group of people running each of these buildings at this time."
This is traditionally a slow season for the accommodations sector, and prior to the pandemic, Sparkes-Giannou said business activity was already hit hard by repeated snowstorms that prompted many cancellations.
Clayton Hospitality has been in business for over a half-century, and the company has endured tough times before.
"But nothing like this," she said.
Because of the global crisis, governments and lending institutions are responding with measures to help companies like Clayton Hospitality, including deferrals on loan payments.
Sparkes-Giannou said interest-only payments are being required on some debt, which is providing some relief. But she said there are fixed costs like insurance, taxes and heat and telecommunications that must be paid.
"We've spent the last week going through every line item in our statements. Every service contract has been scaled back," she said, noting that garbage collection that used to occur three times a week is now down to weekly.
Some hotel floors have been closed down to save on heating costs, she added.
That said, she said the health and wellness of staff and guests remains the top priority.
"We've had to move to a ring-and-run style of room service," she said, explaining that meals are placed outside a room, the server knocks on the door, and then leaves promptly in order to comply with social distancing protocols.
It's an unprecedented situation, with record numbers of Canadians applying for employment insurance benefits, and streets normally humming with business activity going eerily quiet as storefronts are locked down.
The federal government has approved a $107-billion aid package to help those struggling during the COVID-19 pandemic, which will mean improved access to employment insurance and other programs that will provide money to workers and businesses in need.
Long-term relief needed, says Alexander
Meanwhile, Alexander said the decision by various levels of government — and lending institutions — to allow businesses to defer the payment of various taxes, fees, interest and other liabilities will help in the short term.
But he said the longer term situation is just as important, and demanding payment when the state of emergency is lifted could have a "devastating impact."
"Governments need to think about long-term relief for businesses."
Alexander said a pledge by Ottawa to provide a 10 per cent wage subsidy for workers is not enough to keep people employed. He added businesses are facing an "unprecedented crisis."
"There's a lot of stress and concern."
Sparkes-Giannou said it's hard to imagine how the business sector will emerge, but she believes it's important for government leaders to work with business leaders.
"We would love to be part of that solution," she said.