Many Scottish hospitality businesses unlikely to break even until 2022, MSPs told
Scottish hotels, restaurants and bars are unlikely to break even until 2022 and potentially as far in the future as 2023 due to the impact on the sector from Covid-19.
The revelation came alongside figures from Unite Hospitality that around 50,000 jobs have been lost in Scottish hospitality since the start of the pandemic, with thousands of jobs lost due to the delay to the extension of the furlough scheme in October.
The Scottish Parliament’s culture, tourism, Europe and external affairs committee heard from industry representatives in an evidence session on the impact of the pandemic on hospitality.
Willie Macleod, the executive director in Scotland of the trade body UK Hospitality, told MSPs that many businesses do not see a return to financial sustainability until 2022.
He said: “We’re looking towards recovery, we’re a resilient industry and we’ll get up and moving quickly when we’re able to reopen fully, but most businesses are not looking for anything like a buoyant recovery in 2021 and many are saying they don’t expect to achieve break even until 2022.
"All of that is dependent on not just the UK and Scotland getting Covid under control, but really we have to get it under control internationally before hospitality and tourism will begin to recover.”
Mr Macleod said Scotland’s biggest cities had been “devastated” by the pandemic.
He said: “It’s fair to say the cities have absolutely been devastated by this, not just the hotels, but the bars and restaurants as well.
"Looking at industry forecasts, we are looking at occupancies in Glasgow next year that are probably a quarter to a third of what we would normally expect them to be and that’s a similar position in Edinburgh.
"The important industry metric of revenue per available room is showing figures that are barely in the first quarter of next year enough to cover the cost of production of actually having a room lying empty.
"The picture is pretty bleak.”
Stephen Montgomery, the spokesperson for the Scottish Hospitality Group, said the situation was potentially so bleak that it could take until 2023 for the sector to recover.
He said: "We’re looking at 18 to 24 months before we see the next stage.
"We’ve been declined since day one since the beginning of April and we still see that now. We see job losses, we see hospital cases rise, but we also see our hospitality businesses closing on a daily basis.
"There has to be some very serious interventions from the Scottish Government and the UK Government. It’s not one or the other, it has got to be both.”
Bryan Simpson, industrial organiser at Unite Hospitality, said it estimated more than 50,000 job losses in Scottish hospitality due to the pandemic.
He said 4,000 of the union’s members lost their jobs due to the delay to the extension of furlough.
Mr Simpson said: "These were workers who were terminated on the basis that the employer could not afford to retain them because from September they would have had to contribute ten and then 20 per cent towards the furlough scheme.
"The treasury’s decision to extend the furlough at the very end of October … that lost thousands of jobs.
"Those workers could absolutely have been saved.”
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