Growing debt burden set to severely impact Scottish hospitality's ability to recover

14 January 2021 by
Growing debt burden set to severely impact Scottish hospitality's ability to recover

Companies in the Scottish Hospitality Group (SHG) have said they have taken on more than £16m of debt over the last year to stay afloat which, if multiplied across Scotland's 16,000 licensed premises, means the industry would be carrying a debt burden of between £800m and £1.2b.

It is expected that this figure will rise "significantly" due to the "worst ever" December trading figures and a "major shortfall" in government support.

The debt is a combination of CBILS (coronavirus business interruption loans), bank loans, overdrafts and payment deferrals to pay property and equipment rent, among other fixed costs, and is set to severely impact on firms' ability to bounce back from the pandemic and invest for recovery.

Stephen Montgomery, spokesperson for SHG, said: "Our members don't have their usual Christmas reserves to see them through the quieter months and government help doesn't even cover the costs of employer furlough contributions for most operators. This debt is necessary to keep jobs alive, but it will come at a heavy price to the sector, and that's if we even survive.

"It's another reminder of why both governments need to stop playing politics with lifeline support for the sector. This week we've seen Kate Forbes re-announce £25,000 each for bigger operators, which she already announced and agreed with the sector in December before the Boxing Day lockdown. And last week we had Rishi Sunak admitting his £375m wasn't new money.

"Both sides are at it and this confusing, conflicting behaviour needs to end. Businesses must have clarity and honesty about what's available and for that help to be in their hands much quicker than it has been so far."

Meanwhile, the industry welcomed the launch of a Scottish government-funded leadership, management and supervisory training programme.

The new Tourism and Hospitality Talent Development Programme, which will be delivered by the Hospitality Industry Trust (HIT) Scotland and the Scottish Tourism Alliance (STA), seeks to motivate and develop top talent to support the sector's recovery.

The virtual programme was one of the key recommendations of the tourism task force. There will be 975 places available across three categories – supervisor, manager and leader – open to anyone over the age of 16 working in the Scottish tourism and hospitality industry.

The programme is now open for applications with a closing date of 5 February and it is scheduled to commence on 16 February.

David Cochrane, chief executive of HIT Scotland, said: "The tourism and hospitality industries continue to deal with the many challenges that Covid-19 has brought, but I am pleased that we can start 2021 with some positive news about personal development and the recovery of our industry."

Marc Crothall, chief executive of the STA, added: "It is absolutely critical that we focus on the development of our people and future skills agenda, in line with one of the key priorities of Scotland's future tourism strategy, Outlook 2030 to lead us through recovery and deliver what will undoubtedly be a different offering in our post-Covid world."

Photo: Shutterstock

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