Hospitality industry in worse place now than during pandemic, MSPs warned

Scotland’s hospitality industry is “in a worse place” than it was during the coronavirus pandemic, MSPs have been told.

Holyrood’s Economy and Fair Work Committee took evidence from a panel as part of its pre-budget scrutiny on Wednesday.

Marc Crothall from the Scottish Tourism Alliance, Bryan Simpson from Unite Hospitality, and UKHospitality Scotland’s Leon Thompson told MSPs of the problems being faced within the sector amid the cost-of-living crisis and following the impact of the Covid-19 lockdowns.

Committee convener Claire Baker asked the panel: “Are we actually facing a more bleak situation as we go into this winter than what we did coming out of the Covid pandemic?

Mr Crothall replied: “From a business point of view, I think everybody would say we’re in a worse place than we were last year, without question.

“The impact of the cost rises affecting business with the uncertainty of how to navigate through the challenges in front of us – and some of those are still relatively unknown and confused as we’ve seen over the last few days as well – are really causing concern.”

He added that the sector is struggling due to its consumer base being “challenged with discretionary spend” and how they choose to prioritise spending amid price rises.

Mr Thompson, executive director of UKHospitality Scotland, said “nobody could have imagined” coming out of the coronavirus pandemic and facing a “challenge of this scale after we felt the worst of it was behind us”.

He added: “The challenges that face businesses now are much more significant even than the challenges they faced as a result of the pandemic.

“Businesses have been trying to move towards recovery, have been trying to sort of move back towards profitability, but we know from our own surveys that even over the course of the summer, only about a third of businesses were saying that they were trading at a profitable level.

“I suspect that figure has declined within the last month or two as well.

“You’ve got businesses carrying debt from Covid. They’ve got the challenge now of the rising costs around business. We’ve got the cost-of-living crisis, which the public is facing as well – you’re kind of bringing these two things together.

“It’s a completely unsustainable situation for a great many businesses.”

Asked if the support packages given to the hospitality sector during Covid were comparable to that offered during the current crisis, Mr Thompson replied “No, not at all.”

Mr Simpson told the committee that since March, the industry has seen a “huge reduction in footfall”.

He said this has not only impacted the businesses, but has also led to workers seeing their hours cut.

“The impact on workers is almost a double-whammy,” he said.

“They themselves are consumers. They themselves are being hit with, in my view, what is not a price cap on energy – £2,500 is impossible for most of our members, their average wage being between £18,000 and £21,000 a year.

“That puts them in energy poverty immediately.”