COVID-19

Macdonald, Apex warn on redundancies

Macdonald Hotels and Apex Hotels confirmed that they were consulting with employees over possible redundancies.

The comments came as hotels, pubs and restaurants in Scotland were told they could open from 15 July.

Gordon Fraser, deputy chairman, Macdonald, 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 government's furlough scheme has helped to a degree but our essential operating costs, insurance and some wages are still having to be paid, meaning our monthly cash outgoings are still running at £2m while we are forced to remain closed."

Apex has also entered a consultation period with staff. Angela Vickers, CEO, 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.”

Hospitality businesses in Scotland have been told that they can open from 15 July, with Tourism secretary Fergus Ewing launching the Scottish Recovery Tourism to support businesses.

Ewing said: “The coronavirus pandemic has presented challenges across the entirety of the Scottish economy, but it is very clear there are exceptional circumstances facing this sector that must be recognised.

“We have acted as quickly as we can to address the significant financial challenges faced by businesses and provide a comprehensive package of support. We are also pushing the UK government to do more, including a review of VAT rates and to consider extensions to schemes such as the Coronavirus Job Retention Scheme.

“I’ve been engaging with businesses since the beginning of the outbreak and I have heard their calls for more clarity which today I can provide. Businesses should start to prepare for a provisional return to trading – with appropriate safety guidelines.

“This date cannot be definitive and is conditional on public health advice and progression to Phase three of the route map. Businesses must now use this time to satisfy the necessary regulations and adapt to the new way of living.”

Dr Liz Cameron, CEO Scottish Chambers of Commerce, commented: “This will be welcome news for so many who are reliant on hospitality and tourism for their livelihoods. The Scottish Chamber network alone represents over 1,600 businesses in the tourism sector which employ over 46,000 people, underlining how critical it is for jobs and skills that the sector thrives.

“The Scottish Government has listened but for some it is already too late and the challenge ahead remains clear. The sector, which is essential to maintaining the fabric of many areas of Scotland remains fragile. These companies will continue to need support to ensure they can adapt to provide a safe experience for visitors.”

Insight: And so it begins. It has been apparent for some time that once the sticking plaster of government support was ripped off, hotels which have seen no revenue would be exposed. The Job Retention Scheme is due to be tapered from August, when hotels would hope to be enjoying the summer season, which is unlikely to be buoyant this year. There has been a lot of talk about support for the sector but no clarity.

UKHospitality executive director for Scotland, Willie Macleod said: “Businesses will need ongoing support – many to see them through to the Spring of 2021 – this support includes grants to those with rateable values above £51,000 and any underspend on grants made available thus far must be directed in this way. The proposed recovery task force is a welcome step and there will be a need for radical steps including a substantial reduction in VAT to kick-start the tourism economy.”

On Friday the ONS reported that UK GDP fell by a record 20.4% in April, with services falling 19.0%. Pubs, bars restaurants fell 88.5% and hotels 86.9% - two of the worst affected sectors of the economy after travel. Behind those falls were businesses not operating, not paying staff who won’t be buying services when and how they reopen which won’t be getting their money and won’t be paying staff and you don’t need your MBA from Harvard to work out the rest. Distress is now apparent. The sector itself is sound, but it will need support, support which can only come from one source.