WARNINGS have been given that a 7.5% increase in VAT along with the current 57,000 vacancies in the hospitality industry will result in hotel closures across Scotland.
The Scottish Tourism Association (STA) has now written to Secretary of State for Scotland Alister Jack to stress the “severity of the crisis” and the need for “urgent” solutions as the industry remains in “recovery mode”. survival ”, rather than going to recovery.
The STA’s call for help comes as the UK government has raised VAT from its temporary pandemic level from 5% to 12.5% since the start of this month. Industry reports indicate that the scale of the problems affecting the sector could lead to 10% of Scottish hotels being forced to close permanently by 2023, which would have a serious impact on both urban and rural economies.
Recent casualties include the Glenburn Hotel on Bute, Scotland’s first spa hotel which opened in 1892.
Staff shortages, which have been blamed on Brexit and the coronavirus pandemic, have led sites to cut opening hours amid growing fears that many will have to shut down for good.
Nicholas Russell, managing director of Balbirnie House Hotel in Fife, said the industry now faces even more challenges and fears establishments in more remote areas are closing.
The proximity to towns like Glenrothes and Markinch means Balbirnie can draw on a local workforce. But while it hasn’t experienced the same staffing issues as hotels in more remote areas, Russell said they were “deeply saddened” to lose EU team members as a result of Brexit .
“Before Brexit around 20% of our team were from EU countries and our EU members brought personality, great happiness, diversity and culture and we are deeply saddened to have lost it all, ”he said.
He said it had been a “real battle” to overcome the challenges posed by Brexit and the pandemic, but support from the local community and dedicated staff helped Balbirnie overcome them.
However, he added, “Our hearts go out to industry colleagues in remote destination properties who are in such extreme difficulty.”
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Russell said the challenges ahead included the UK government’s intention to reinstate the 20% VAT rate which was reduced to 5% during the pandemic. There are calls for it to stay 5% online with many other EU countries.
Supply chain issues and soaring prices are also compounding problems in the hospitality industry.
Balbirnie’s suppliers asked the hotel to place orders three weeks before they were needed and Russell said some of the price increases were ‘extraordinary’ with premium cuts of beef up 20 % in recent months.
He said it would help if Scotland were able to introduce a one-year visa program, or something similar, allowing people to come from the EU to help.
“It’s not Scotland’s decision to take and the same with VAT – MPs have been told point blank this is not happening. Scotland’s hands are tied but we are not talking to miss a few thousand people, it’s tens of thousands, ”he said.
The STA is due to meet with Scottish Office Minister Iain Stewart on Thursday to ask for help from the industry. An STA spokesperson said their letter to Jack was forwarded to him.
STA Managing Director Marc Crothall said: “Scotland will host the globally significant COP26 event in November, with the global spotlight once again on our country, our people and our assets; it seems unthinkable that our country is in a position where we cannot staff our hospitality and tourism businesses to provide what in many cases is well below the line in terms of basic service .
“They are also faced with rising costs, repayments of loans taken out at the height of the crisis, VAT repayments, increasing recruitment costs, juggling staff rotations, additional administration, managing customer compliance with additional regulations brought by Covid and the increased utility costs that Covid and Brexit have brought home. ”
He said a visa similar to the one currently granted to heavy truck drivers was needed for the hotel industry, but for a longer period.
The British government has been approached for comment.