Hotel Recovery Programme worth £14m announced but is it enough?

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Blythswood Square Hotel
The Scottish Government has thrown a lifeline to the struggling hotel sector with a funding package worth £14 million however although welcome trade bodies the STA and UKHospitality don’t believe it is enough.

The Hotel Recovery Programme that Finance Minister Kate Forbes announced today will, the government hopes, help to secure up to 3,000 jobs at Scotland’s larger hotels until the start of the summer 2021 tourism season. Eligible businesses can apply for individual grants of up to £250,000 in addition to a suite of wrap-around business support and advice.

But says UKHospitality Executive Director for Scotland, Willie Macleod, “The £14m programme is a positive sign of intent, but it is going to be a drop in the ocean for the sector. The reality is that any programme of recovery intended to keep hotels in Scotland open and staff in jobs, will need to be much bigger and much more wide-ranging. It must be hoped that this is an initial step in supporting these businesses and that further resources will be made available in the likely event that the programme is over-subscribed.

“These are businesses that have been devastated by the pandemic. Almost all of Scotland’s tourism and hospitality businesses ground to a complete halt over the Spring. Not all businesses are yet open and those that have opened are operating below capacity and have concerns about medium-term profitability. The future of many hotels and so many jobs around the country is still in the balance.

“Support will need to be much more extensive to ensure it reaches all businesses who need it. UKH estimates that there are around 950 larger hotels in Scotland, with a rateable value over £51,000, which did not qualify for grants that were available to smaller businesses. Many were unable to access government-backed loans or the Hardship and Pivotal grants provided by Scottish Government. On average, hotels had to meet £60,000 each month during lockdown to cover fixed costs.

“As the Government has identified, these businesses employ lots of people and support a long supply chain. A budget of £14m may mean that only 50 businesses, 5% of larger hotels, will be supported if each qualifies for the maximum sum. This is not enough to avert the crisis facing the sector.”

While Marc Crothall, Chief Executive of the Scottish Tourism Alliance said, “Today’s announcement will be extremely welcome news, particularly for the hotels eligible for this support, many of which will have been unable to access grant funding to date. The programme will go some way in helping to secure many of the hotel jobs in the short to medium term which would most likely otherwise be lost.

“The £14m pot of cash whilst sizeable is however limited and there won’t be enough to support all the hotels that are in need of immediate financial support to help them survive, recover and maintain their previous staffing levels.

“It remains the case that without this support and other forms of longer-term support and relief in the future, many of Scotland’s hotels will remain at significant risk of being forced into permanent closure which will result in many more thousands of jobs still being lost.”

The Programme will be jointly administered by the Scottish Government’s enterprise agencies and builds on the existing funding and support for tourism businesses through the Creative, Tourism and Hospitality Hardship Fund and the Pivotal Enterprise Resilience Fund.

VisitScotland will also deliver £1 million in grants to self-catering businesses that have not received any other Scottish Government COVID-19 support. Businesses that apply and meet the criteria will be eligible for a one-off £10,000 grant to support them through the winter season.

Tourism Secretary Fergus Ewing said, “We recognise the important contribution the hotel sector makes to tourism and the wider Scottish economy, supporting approximately 46,000 jobs across the country.

“Scotland is home to many of the world’s iconic hotels and they, like much of the sector, have suffered considerably this year from the impacts of coronavirus. The Hotel Recovery Programme is a dedicated funding package designed to safeguard jobs in these establishments and offer some security until the new tourist season begins in summer 2021.

“The Scottish Government is doing everything in its power to support the tourism industry, however without significant borrowing powers at our disposal this action will always be limited. Whilst we very much welcome measures taken by the UK Government, such as accepting our call to cut VAT rates for the tourism industry, longer-term support for jobs is necessary. I hope the UK Government responds positively to our ask for an extension to the Coronavirus Job Retention Scheme.”

Background

The Enterprise Agencies (Scottish Enterprise, Highlands and Islands Enterprise, South of Scotland Enterprise and VisitScotland) will begin taking expressions of interest for the Hotel Recovery Programme in late August. Businesses that meet the criteria for the Programme will be eligible for both grants and a holistic business review with bespoke support based on their individual needs.

The Hotel Recovery Programme comprises £9 million in revenue and £5 million capital.

Applications for the self-catering support scheme will open in early August. VisitScotland will work with The Association of Scotland’s Self-Caterers (ASSC) to review applications received for the self-catering support scheme.

Further details and opening dates for both funds will be announced in due course.

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Hotel Magazine Scotland News Team

Hotel Scotland is a new publication (2017) from the publishers of DRAM – Scotland’s leading on-trade magazine. Hotel Scotland is a newsy magazine which covers all aspects of the industry in Scotland. From who’s who, to industry issues and refurbishments.
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