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The Herald – 26 May 2022Stephen Leckie, great, great, great, grandnephew of founder of Crieff Hydro, Henry Meikle, with wife and director FionaTHE Scottish tourism industry is braced for a difficult first full summer coming out of coronavirus with major staffing problems, rising costs and fewer bookings than expected creating a challenging backdrop this year.However, despite short-term hurdles, the hotels sector is seeing positive activity and scope for opportunity with almost 300 Scottish hotels and guest houses on the market, according to one listings site.While the shortage of 45,000 hospitality is unlikely to be dented this year, a successful 12 months ahead buoyed by more international visitors would be expected to lay strong foundations for future trading for existing operators, while a fluid market is attracting interest from south of the Border and also from Asian investors.Stephen Leckie, owner of eight hotels in the Crieff Hydro group and chairman of the Scottish Tourism Alliance, said: “It is not a disaster, but it is not the growth we would like to see coming out of Covid.“If you are a honeypot destination, Inverness, north coast, NC500, the highlands the islands, Skye, business is good. If, however, you are in cities or in every other part of Scotland, it is tough.”He said: “It is pretty bleak, I have to say, it is not great reading, for tourism as a whole, hospitality as a whole. Costs have gone up much more than anybody anticipated. Some are saying they just cant afford to open the doors. The Covid situation is still nowhere near gone.”He said: “The lack of staff is significant. Some say 2025 before it really builds back, others might say next year, maybe, but what we are hoping for is that this summertime it will come back. The business will come back, but the staffing won’t come back this summertime.”He said: “The cost of doing business is going up. Our insurance has gone from £400,000 four years ago, to £1.1m, for basically the same thing. The electricity bill increase last year was £600,000, this year we budget £1.5 million.”However, the buying and selling market is vibrant, according to experts.Stuart Drysdale, of specialist hospitality agency Drysdale and Company, said investors from south of the Border and corporate groups are among those active in the Scottish market. He said: “People are selling residential properties down south, especially in the south-east, and buying small hotels.“We have seen that that sort of lifestyle/relocation market is quite good, and the larger stuff with a lot of new investors to the market, so private equity firms.“With the recent sales of Fonab Castle and Dunkeld House, these are big institutions that have bought these that are really confident in them and the hospitality market.“The private investors and private equity funds are paying good levels of prices for opportunities.“For private individuals it is whether they can get the funding to meet the aspirations of the selling party.”Gary Witham, Christie & Co hospitality director, said: “It’s a whole variety from small 10-15 beds, what we would call lifestyle businesses, up to a 100-plus city centre hotels which you would see more as a corporate type offering. A typical one would be in the £2-10m bracket, small corporates, often high net worth individuals.“What we are seeing in those sorts of markets is people will look back at 2018and 2019 and get a good feel for what a mature trading profile looked like and then they’ll look at the last 12 months and say how has the hotel bounced back post the worst Covid restrictions and take it from there.”He said: “Over the last few months we have started to see money coming back from south-east Asia and China, investors over there looking for opportunities. Hotels in Scotland typically will give a better return initially pricewise than the equivalent property in England.”Tony Spence, of Christie & Co, said: “If we had to get one word out to vendors who are looking to maybe sell, this is the right time. There are certainly opportunists out there.”We have started to see money coming back from south-east Asia and China
By Guy Stenhouse for the Herald – 13 September 2021
Rural Scotland – though wonderful in many ways – is economically challenged.
There are exceptions but in most very rural places there is depopulation and more particularly an increasingly ageing population.
The SNP Government sitting comfortably in Holyrood realises there is a problem but misdiagnoses what that problem is and repeatedly applies the wrong solutions.
The key problems are poor connectivity – both physical and digital, a lack of appropriate housing stock, poor access to services such as healthcare and education and, above all, a lack of jobs.
Within this cocktail of difficult background factors the chumps within the SNP Government have identified a pantomime villain – the holiday-letting industry – and decided to clobber it.
Let’s be clear, there is a problem with too many holiday lets in certain specific areas, especially Edinburgh. The Scottish Parliament last year passed legislation to enable local councils to require planning permission for holiday lets in areas where there is too much pressure. Provided it is used in a targeted and appropriate way this is sensible. The City of Edinburgh Council has said it wants to use this power and it is hard to argue with it.
Unfortunately, having already dealt with the actual issue through planning, the Scottish Government has ploughed on and decided to require all holiday lets to be licensed and it is in the detail of its proposals that the dangers lie.
The Government says its objectives are to ensure safety and good standards but in fact there is existing legislation already in place for fire precautions, water quality, neighbour nuisance etcetera which achieves that. The new legislation is unnecessary but its effect would be to reduce quality and choice for tourists and adversely impact income and jobs in rural areas.
The proposed licence requirements enable councils to set onerous and subjective criteria which allow refusal. On top of that the licences have to be renewed every three years.
What this means is that owners will not invest in upgrading their accommodation. How can you build a new facility if you might be refused a licence next time? What bank will lend to a holiday-let owner if the cashflow which will service the loan might only last three years at most? Saying that everybody will act sensibly does not avoid the damage – the existence of these powers is what would cause the trouble.
The consequence would be less good quality accommodation and in turn fewer tourists and less spending power brought to rural areas. Tourists spend money in shops, they buy meals in restaurants, maintaining and upgrading their accommodation provides work for local tradespeople. Nearly everywhere in rural Scotland we want more tourists not less.
The solution is simple. Holiday lets should have an automatic right to a licence if they meet the necessary objective safety criteria and an automatic right to renewal of that licence if they continue to comply. To ease the bureaucratic burden on councils you actually don’t need licensing at all but a registration scheme run by an industry body – many other countries opt for this simpler arrangement. The Scottish Government needs to stop pretending to listen to stakeholders who have been telling them their licence scheme will be a disaster – the key industry bodies resigned from the working group the Government had set up – and actually come up with something workable and appropriate.
What the Scottish Government should be doing is actually helping to sustain the economies of rural areas.
The system for procuring and operating our ferries has proved itself an utter disaster. Caledonian MacBrayne should be broken up and separate operators allowed to bid for individual routes and provide their own ships – communities should be encouraged to bid themselves.
Fast, reliable broadband – spend the money and get it done.
Housing – the problem is not too many second homes but too little supply of new houses. We have plenty of land so get some more houses built and give local people preferred access to them.
Jobs – Scottish ministers should ask themselves constantly why they are doing tasks in the central belt. Government should take the lead both directly and through its agencies by basing activities in our rural areas to support their economies. That is what devolution is supposed to be all about – power was not given to Scotland only to be hoarded in Edinburgh.
Guy Stenhouse is a Scottish financial sector veteran who wrote formerly as Pinstripe
