Introduction of “Rule of Six”: Will It Further Put Pressure on Ailing Hospitality Sector?

Summary

• There has been a rise in the number of Covid-19 cases in the United Kingdom. The total number of confirmed cases till 10 September 2020 was 355,223
• In order to restrict the growing cases, the Government has rolled out a new rule which allows a maximum of six people to gather
• People will be charged a fine of £100 on breaking the norms on social gatherings, and the penalty will go doubling on the repetition of the offence up to £3,200
• The tourism and hospitality sectors are going to be the major sufferers because of the introduction of this rule

The continuous surge in the number of Covid-19 cases has forced the British Government to take preventive measures to stop the spread of the coronavirus infection. In order to restrict the growing cases, the Government has rolled out a new rule which allows a maximum of only six people to gather at a place, applicable to indoors as well as outdoors and to all ages. However, there are some exceptions to this new set of rules. Pubs and restaurants, and other social premises and venues, will be legally required to request test and trace information from customers and keep the details for 21 days. It will come into existence from 14 September 2020.

What are the Exemptions to this Rule?

• Households or support bubbles of more than six people are exempted
• Gatherings for work or education of more than six people will be allowed
• Weddings and funerals will allow 30 attendees
• Sports events can also have more than six people
• Places of worship will also allow 30 people to gather as earlier

Are the Rules Similar for Whole of the UK?

Rules are different for different parts of the UK.

Scotland- Six people are allowed to meet from two households, be it indoors or outdoors. Children under the age of 12 do not come under the limit.

Wales- A maximum of 30 people can meet outdoors, avoiding gathering indoors with anyone who is not a member of the same household (or extended household), unless they have a good reason. An unlimited number of people from four households can join to form an "extended household".

Northern Ireland- Six people are allowed to meet indoors from two different households, and groups of up to 15 people outdoors. However, localised restrictions are being introduced in Belfast and Ballymena.

Areas Under Lockdown

The places of UK which are still under the lockdown include Bolton Caerphilly, Belfast and Ballymena, Parts of Greater Manchester, East Lancashire, Preston and West Yorkshire, Western Scotland, and Leicester

What Happens to Those Who Breaks the Rule?

People will be charged a fine of £100 on breaking the norms on social gatherings, and the penalty will go doubling on the repetition of the offence up to £3,200. The British Government will be introducing "Covid-secure marshals" in town and city centres in order to enforce social distancing rules. The enforcement of quarantine rules for travellers into the country will also be set up by the Border Force, as mentioned by the PM Boris Johnson.

Prime Minister Boris Johnson’s Take on This

The prime minister is hoping a bold plan of mass testing, allowing people to lead more normal lives in the coming months, a plan is being piloted in Salford next month. He said that the country is facing a number of challenges, which will need the technology to work. Necessary materials are required to be manufactured so that as many tests can take place, and an efficient distribution network is also needed to overcome the numerous logistical challenges, he added.

The people of England are also facing issues regarding the test; hence the Government is increasing testing capacity further to meet rising demand. In case a person is suffering from fever, a new continuous cough, or has lost the sense of taste or smell, he/she can book a test. If no such symptoms exist, there’s no need to book a ticket.

What Will be the Impact of This Rule on Businesses?

The travel and hospitality sector has been hard hit. As soon as the announcement was made by the Government, accommodation owners started fielding calls from customers with bookings for large cottages and lodges, leaving self-catering businesses with larger properties in dire straits.

The UK hospitality sector has already been suffering from the effects of coronavirus. Large numbers of employees have already lost their jobs due to the falling revenues of the companies. Pubs and restaurants have also been severely impacted. Though the Government introduced the ‘Eat Out to Help Out’ scheme to help, the sector recovery is slow, and it is still receiving a low number of customers.

Below we have discussed some of the stocks that might have an impact because of the new social distancing rule:

Fuller, Smith & Turner PLC (LON:FSTA) is a pub and hotel company. The stocks of the company were trading at GBX 572.00 on 11 September 2020 (GMT+1 15:30 PM), down by 1.04 per cent. The Mcap of the company was reported at £186.93 million, while it has given a negative return of 39.79 per cent on a year to date basis.

TUI AG (LON:TUI) is a tourism company. The stocks of the company traded at GBX 349.90 on 11 September 2020 (GMT+1 15:32 PM), down by 1.99 per cent. The 52-week low price of the stock was GBX 254.00, while the 52-week high price was reported at GBX 1,081.50. The market cap of the company was reported at £2,102.21 million, while it has given a negative return of 63.99 per cent on a year to date basis.

Let’s dive into the present scenario of the UK and have a look at the rise in the number of Covid-19 cases which prompted the government to go for this new rule.

There has been a rise in the number of Covid-19 cases in the United Kingdom. According to the latest figures from NHS Test and Trace, England saw 9864 number of people who were tested positive for the coronavirus in the week ending 2 September, increasing by 47 per cent from 6732 in the previous week. Since the system was launched in May, it has been the highest number of weekly positive cases recorded. NHS Test and Trace could only manage to reach 69.2 per cent of the contacts of people diagnosed with the virus in England during the same week, which was well below the 80 per cent or more being targeted, as recommended by the government scientific advisors to curb the infections from spreading.

As per the World Health Organisation data, on 10 September 2020, the number of positive cases recorded was 2659, with 8 deaths. The total number of confirmed cases recorded till 10 September 2020 was 355,223, with 41,594 of reported deaths.

(Data Source: World Health Organisation)

Conclusion

The Government has introduced the new rule for the betterment of the people, and to restrict the spread of the disease. But the impact will be seen in the already suffering sectors such as the hospitality, as they are now legally required to request test and trace information from customers and keep the details for 21 days.