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Business Briefing: Difficulties are still piling up for many north companies

By Contributor

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Increased costs are making life difficult for many business owners.
Increased costs are making life difficult for many business owners.

David Richardson of the Federation of Small Businesses on continuing struggles for many Highland firms.

Life has been far from easy for the north’s business community of late – especially for tourism-dependant businesses – and the forecast is for more of the same for many.

At the start of June an FSB Highlands and Islands survey found that a quarter of tourism and hospitality businesses in Ross-shire, Sutherland and Caithness were struggling. Not good, but to put it in context, four in 10 tourism and hospitality businesses in the Highlands, Islands, Moray and Argyll as a whole were struggling, with one in 10 really struggling/barely staying alive. The NC500 undoubtedly put the northern Highlands ahead of the game.

In early August a fresh survey found two-thirds of all businesses in the Highland Council area were doing OK or better, but seven per cent were really struggling.

So where are we now? While trade appears to have picked up for many tourism businesses, staycations have not entirely compensated for the absence of overseas visitors, who spent more than £2.5 billion in Scotland in 2019 alone.

Operators will now be reviewing their finances and hoping they have sufficient reserves to maintain and refurbish their premises, start paying off any debts accrued during the pandemic and, most important, to carry them through into the spring.

Government assistance, such as furlough and self-employed income support, has now come to an end and many costs have risen substantially too. In a bid to attract and retain first-rate staff, one west coast hotelier told me that over the past 10 years their wage bill has increased from less than 20 per cent of turnover to around 40 per cent. And what of utility bills? Another north Highland hotelier has just signed a two-year contract for electricity, and the best price they could negotiate lands them with a £112,000 increase – that’s over £1000 more a week!

And it’s not just about hotels. Self-caterers and B&B and Airbnb operators will shortly be hit by increased costs arising from the Short Term Lets legislation.

Quite simply, reduced income and increased costs inevitably mean increased prices for consumers, to which the VAT increase on tourism and hospitality from five per cent to 12.5 per cent must be added. And what about Highland Council’s desire to introduce a new tax on visitors – the Transient Visitor Levy or bed tax?

Ross-shire boasts world-class scenery and natural and cultural heritage, plus a wide range of amazing outdoor activities, but this counts for little if businesses cannot provide similarly outstanding services and value for money.

World-class destinations need world-class businesses at all price-points and levels to be world-class, and, as a result of the pandemic, far too many of our great businesses are now finding themselves without the resources they need to bring their properties back up to scratch or the staff they need to provide outstanding customer service.

While we all hope for a rapid return to normal and that 2022 will see the return of much-needed overseas visitors, it is vital that all visitor experiences surpass expectations and that none disappoint.

With so much at stake it is imperative that governments at all levels, from Highland Council up, do nothing to add to businesses’ costs and woes at this precarious time. Ross-shire businesses must not be allowed to fall at the final hurdle.

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