We closed the hotel on the morning of the 21st March, in line with lockdown announcements.
As we are a seasonal business, we were just starting to get going for the season. We had opened on the 7th of Feb, but this had been a tricky month due to very poor weather and ongoing flooding across the UK. For most businesses in the North Highlands, the timing is awful as it falls right at the end of the winter closure period- and after any refurbishment/project costs have been committed. Coffers are empty. Furthermore, the main profits for the year are derived from trade between April and September, so the longer the lockdown continues, the greater the impact for the whole year- potentially meaning that businesses will need to survive with little or no profit until Easter 2021.
Given our location we are not in a position to recruit locally, and so need to make living provision for all our team- albeit some choose to settle here longer term. When we shut last month, we had a team of 23 FTE working with us, 14 of whom are currently living on site at the hotel- all locked down together.
In the main, the furlough scheme is very welcome- our team are our biggest asset and we very much look forward to working with them when we re-open. Indeed, the hotel will be very reliant upon them in the early stages of re-opening and there is a risk that the longer the lockdown progresses, the more our live-in team will be suffering from cabin fever and choose to move on once restrictions are lifted. Particularly if other countries etc lift their restrictions and are recruiting for seasonal workers.
However, we do have 5 new members of the team who joined us in March, in readiness for the Easter uplift. These team members are not eligible for furlough, and yet, these job offers were made many months ago. Some are from EU member countries and it is doubtful that they would even have recourse to Universal Credit. Given that many businesses were building up to Easter, this must be an issue that is reflected across the country. These employees will be needed to get businesses back on their feet.
We have also applied for the £25,000 government grant- however, despite applying for this the day it was launched, we have not received anything. I do have a concern that cash will run out if this hasn’t arrived by the end of the month, especially as we will need to pay our team before claiming back the furlough from the government.
Whilst it is helpful to defer VAT payments, we will have quite a large outstanding tax bill later in 2020 comprising of accrued VAT, Corporation Tax from 2019 and Self Assessment. Whilst we had reserves to enable these bills to be paid they will have been used up to keep the business afloat now. Ultimately though, we are kicking the can down the road and I would imagine that for most businesses it would be a great help if all tax bills could be deferred for a further 6-12 months. Especially as we will have lost a large part of the season- if not all.
Our small communities will have been almost completely shielded from the virus, and this will bring a further dilemma. Many of our communities are understandably concerned that once tourism and travel re-starts, that with this comes a substantial risk of transmission. This was already true before the lockdown happened. In some instances, this concern spills over into rather aggressive and unwelcoming behaviour and it would be great to see local councils, MSPs, tourism bodies engaging with our communities to ensure we remain famous for our ‘Highland Welcome’ and that the concern doesn’t alienate our guests just as our businesses are getting back their feet.
Finally, I would very much welcome discussion now about suitable exit strategies. Whilst almost all would agree that it is too early to ease restrictions now, this should not preclude serious conversations about shaping those exit strategies. Businesses need confidence in government, and also time to plan. The fitness of our businesses and speed of recovery will be very much dependant upon good planning and good decision making now. We have all witnessed the impacts of poor preparation when it comes to testing and PPE.