Scottish hotels are spending on average £62,000 a month to stay running, with several owners pleading with the Scottish Government for more support and a clearer route back to opening again.
The figure is from industry group UK Hospitality, whose executive director for Scotland Willie Macleod said the sector has been “crippled” from the lack of earnings due to coronavirus closures.
Earlier this week, the First Minister outlined plans to get our of the current Covid-19 lockdown, with a return to Level 3 restrictions proposed by the end of April, meaning Scots are expected to remain within their local authority area.
Staycations will therefore not be possible under current plans until at least May, while tourists should not travel into, or out of, Level 3 areas for holidays.
Currently, those in the hospitality industry have received one off grants through the Strategic Business Framework Fund after a January top-up was announced.
Larger hospitalities business can apply for a £25,000 grant on top of the four weekly payment of £3,000 – while small hospitality businesses can apply for a £6,000 grant on top of the four weekly £2,000.
The Scottish Government announced last week that the retail, tourism, hospitality and aviation businesses will pay no business rates during 2021-22.
Macleod was a part of an industry taskforce that suggested a complete review of the business rates system, with reduced VAT. The taskforce was expecting to see the government’s five year recovery plan for the sector in January, but so far this has not been produced.
UK Hospitality conducted research last year which put the average fixed cost of a hotel to be closed at more than £60,000 a month.
“But they still have other costs – insurance, maintenance, auditing accounts – they are crippled and so are the suppliers,” said Macleod.
“Most people in the industry would love to open in Easter, but I fear it would more than likely be in June, depending on if there isn’t a new strain and Covid cases go down.
“There is a pent up demand for the sector, but we need to carry out a review of the business relief, as it discriminates against our sector as it is based on turnover.”
The chief executive of the Crieff Hydro Group of hotels also joined the call to reopen the hospitality sector.
Stephen Leckie, who is also chair of the Scottish Tourism Alliance, said it has cost him around £25,000 a day to run his hotels, although he has since managed to cut it to £20,000.
This equates to around £650,000 a month running all of his hotels, despite them not earning during lockdown periods.
The group has started to dip into its overdraft and Leckie said he has used money out of his own pocket to pay around £40,000 to help furlough 140 members of staff.
“We had a budget this year, if we opened in February, of £100,000 a day with a £40m turnover – that’s not going to happen now,” explained Leckie.
“Every day, every hour, companies like ours are losing money – we have to dig into our own pockets,” he continued, adding: “We respect that health and safety is a priority, but the biggest thing the government could do for us now is to let us trade.”
Jill Chalmers, managing director at Glenapp Castle, criticised the First Minister for a “lack of guidance” during the pandemic.
The historic hotel in Ayrshire is currently spending around £40,000 to run the empty castle and still run service enquiries.
The business has so far lost £1.4m of top line revenue since the first lockdown last March. Currently 90% of the staff are on furlough.
Chalmers said: “We are hugely frustrated with the First Minister’s announcement and to again be faced with a lack of guidance as to exactly when Scottish tourism and hospitality will reopen.
“We urgently need a clear date as to when we can reopen – it is also crucial for us to be able to plan and work with our staff so they know when they will be able to come back to work.
“With so much pent up demand for UK staycations, we are hearing of hotels in England who are reporting high levels of bookings and enquiries, but yet again, we have been left in the dark and out of consideration for holiday bookings,” she commented.
“This is a terribly disappointing outcome for the sector and for those people whose livelihoods have been under threat for so long.”
Graeme Allen, owner of Kinloch House Hotel in Blairgowrie, had to take out a £200,000 Covid loan on the basis he was expecting to open soon – but the money is “rapidly disappearing” with no direct source of income.
The hotel received £25,000 worth of relief on top of the £3,000 a month grant from the Scottish Government to keep going, but Allen reckons he only has about £70,000 in the bank.
“It sounds like it won’t be until June we will open,” said Allen. “There is absolutely no point in opening if we can’t sell alcohol in Level 3, as we previously lost bookings as a result.
“It’s the travel restrictions that kill us, we have dozens of guests locally, but a lot of these guests are coming from abroad America and Europe coming for shooting and fishing parties.”
Marco Truffelli, managing director at Rufflets Hotel in St Andrews, started preparing for the outcome of a lockdown after he returned from Italy last February – warning staff that the worst was yet to come.
The hotel was expecting to spend about £100,000 on refurbishment but had to delay to save money. It currently have 25 staff on furlough and five still working.
Truffelli said: “We made provisions and prepared for the worst macroeconomic situation, but the traditional business model is no longer sustainable.”
Speaking on Wednesday he said: “In the last 48 hours there’s been a positive spike in booking, but the announcement yesterday almost killed all of that – the direction of travel we are taking will be detrimental to the economy and many rural areas if we don’t open up.”
Truffelli said he was “genuinely flabbergasted” about the Scottish Government’s divergence in strategy from that of the rest of the UK.
“We need a clear direction of travel and diverging now will bring us to a tipping point that will not only affect hospitality, but those attached to it.”
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