Hospitality sector on its knees
Letter to The Inverness Courier, Sunday 3rd March 2024
Hospitality sector on its knees
Visitor numbers in the Highlands have been high since Covid. Scots have been travelling overseas, but replaced by good numbers of high spending foreigners. However, summer's busy roads and crowded cafés disguise a major problem within the hospitality industry - cost increases far exceed the ability to increase our income. Scotland is already an expensive place to visit. I've heard said that every hotel in the Highlands is up for sale, and am aware that many restaurants are closing. High streets are peppered with unsightly empty shop fronts.
The major cost of a café or bar is staff. Wage bills are 30 per cent higher now than five years ago. The anti-social hours means that hiring staff is a nightmare, especially chefs. It's appealing to take a cosy 9-5 desk job, perhaps even working from home.
Monthly interest rates have doubled, and banks are tightening their lending requirements. Food and energy bills have also gone through the roof, and business rates are about to rise significantly.
Another, often overlooked issue is the mounting regulatory checks on every aspect of the operation: gas, refrigeration, lifts, emergency lighting, extractor fans, alarms etc. For many services, we need to bring expert firms up from the central belt at £1,000 a day.
During this period of austerity there is not a lot of spare cash around in locals' pockets - the hospitality industry is only viable because of tourism. A major issue we have here is the length of the season: basically a third of the year is good, a third alright and a third a disaster. But you wouldn't want to shut in the winter, as you would lose your staff and you have fixed costs to pay in any case.
You would think that the Scottish and Westminster governments would want to do what they can to help what is the biggest sector by employee numbers in the Highlands. Here they are doing the opposite. The Scottish Government have announced that business rates will increase to a 25 year high, tax on alcohol has just had a substantial hike, and while one cannot complain about a significant increase in the living wage, in practice the entire work force needs to have salaries increased as a result.
In England the 75 per cent business rates relief for hospitality businesses has been extended for a further two years. Despite a lot of pressure the Scottish Government has declined to follow suit. On March 6 there will be a budget in the House of Commons. The hospitality and night-time industries are calling for a cut of VAT from 20 per cent to 12.5 per cent. Employers and staff in the hospitality industry are being asked to petition their MP to apply pressure. Look up www.ntia.co.uk
I was brought up in the Clachaig Inn in Glencoe. In those days a very good living could be made as a publican. This is rarely the case now. I am involved in two significant restaurants in the Highlands, and know many hospitality business owners. I can assure you, many are near breaking point.
Richard Lochhead is the Minister for Tourism. Is he fighting to defend this crucial area of the economy with its hundreds of thousands of jobs in Scotland? It doesn't feel like it.
Angus MacDonald
Highlands Liberal Democrat Councillor and Westminster Candidate