Scottish hoteliers have been warning since the start of March that Armageddon was approaching for the hotel industry if more support wasn’t received from Government and this week their predictions came to fruition with nearly 2,500 hotel employees now facing redundancy and more to follow in the weeks ahead.
Furlough wasn’t enough to save hotels from making tough decisions ahead of the 45-day August deadline which saw them liable for employee NI and pension contributions from the 1st of the month.
InterContinental Hotels Group (IHG) was first out of the block, announcing expected redundancies at five hotels including The Blythswood in Glasgow and The George in Edinburgh. Job losses are expected to be in the region of 200. Crieff Hydro was next to announce 241 possible job losses and Apex Hotels followed revealing they were taking the same route although they did not reveal the number of job losses from its 1,100 staff base, spread across its 10-strong portfolio. MacDonald Hotels too revealed up to 1,800 redundancies were expected.
Angela Vickers, CEO at Apex Hotels, said, “Throughout this period we have made use of the Government’s Job Retention Scheme with the aim of protecting jobs for as long as possible, but the impact coronavirus has had on our industry has been devastating. Our sector will be the last to reopen, and when we do it will be with many restrictions in place on how we can operate. Around 40% of our travellers come from overseas so international quarantine measures combined with strict 2m social distancing rules will all be a reality and severely impact our business. Without additional hospitality sector support, it is simply not feasible for us to open our doors and resume trading anywhere close to pre-COVID-19 levels.
“Our entire group has an average monthly occupancy of less than 10% from now until the end of the year. Normal occupancy levels at this time are over 90%. This dramatic downturn in business, coupled with the uncertain economic outlook ahead, has forced us to restructure our team and look at how we operate going forward and survive this crisis.
She added, “The Apex Hotels brand has been built on the strength of its people, so discussing potential redundancies is something we never wanted to consider. We will continue to do everything in our power to improve our position, but we know that it will take time for our business and the industry to bounce back. Our commitment to recovery and rebuild remains stronger than ever, and our sole focus will be on welcoming guests again and returning to usual staffing and business levels as quickly as we possibly can.”
Crieff Hydro boss Stephen Leckie, operates 11 properties, including Peebles Hydro and the King’s House at Glencoe, and has 950 staff he said of the decision, ‘When we closed our doors at the end of March, it was one of the darkest days in our 150-year history and this is another. The impact coronavirus has had on our industry and business has been immediate and drastic. As a family-run business built on the strength of our people, discussing potential redundancies is the toughest step we’ve ever had to consider. I am personally devastated for every one of our team who could lose their job.
“Throughout this process, we’ve done everything we can to look after our people. But despite all the measures we’ve taken so far to reduce costs, we anticipate that when we do open, bookings will be down by 30-50% for the best part of a year. This will amount to a revenue loss of at least £17m (50%) in the current financial year. For every month we’ve been closed with zero income, we’ve had to pay £500k just to keep our buildings safe and insured. This would have a profound effect on any business.
“To try to navigate our way through this crisis, we’ve made use of the Government’s Job Retention Scheme as well as securing an additional £5m in loans from our bank to give us the best chance of survival when we are eventually allowed to reopen. This comes with a heavy financial burden but is the only way forward to rebuild the business and protect the remaining jobs.
“We know that we have many loyal customers who visit us year after year, so we hope the recovery is quick and we can welcome families back to our own family of hotels in the coming months. The effects of this pandemic can’t last forever and our long term vision is to rebuild the team in the future when business returns.”
While MacDonald Hotel’s Deputy chairman Gordon Fraser said, “We had really hoped to avoid this very unwelcome step, but with no realistic prospects of a return to anything like normal trading for the foreseeable future, we were simply left with no choice.
“Potentially, we are looking at around 1,800 roles at risk, in all areas and at all levels of the business.”
The news came the same week Tourism Minister Fergus Ewing announced a tentative opening date of 15th July for hospitality.
