Restaurants and other leisure outlets showed great resilience during the pandemic (pic: Terry Murden)
Controlling inflation by curbing spending must not cause further damage to the hard-pressed hospitality sector, says KATIE CORRIGAN
With a gloomy economic outlook for Autumn due to interest rate rises biting deeper into household budgets, inflation forecasted to hit 11% and further hikes in energy prices, is the prospect any brighter for summer? The immediate answer might appear to be “no” given train strikes, and staff shortages in many sectors including travel and hospitality.
And for anyone looking for escapism somewhere abroad the operational issues affecting the aviation sector are further cause for anxiety. Just as we experience an easing of the Covid restrictions which have blighted air travel over the past couple of years, the sector finds itself unable to gear up to meet current demand.
Consequently, choosing to fly abroad for a holiday this summer feels more like a stress-test exercise for your organisational skills, mental health and credit card, than a simple matter of a relaxing break under a sunny sky.
The pandemic, of course, forced many of us to holiday at home, which has had its own reward for our domestic tourism sector; and recently published data suggests record numbers will holiday at home again this year, which will provide a welcome economic bright spot this summer.
Hospitality is a sector that showed much resilience during the pandemic, and which has had to adapt and innovate in order to continue to attract guests whilst making them feel both Covid safe, and welcome. It is a sector now facing the same cost pressures as consumers, in addition to severe labour shortages exacerbated by Brexit, the capriciousness of the “book now cancel later” culture, and the “great resignation” which is affecting all sectors.
As a commercial property lawyer with clients in the hospitality and leisure industry (and as a big fan of a summer staycation), it is important to me, and many others too, that this sector prospers. I have been privileged to work with hospitality clients who emerged from lockdown in 2021 with renewed vigour to execute their delayed plans and invest in their properties, staff and local economies.
Highland Coast Hotels which has created a collection of unique four-star hotels located around the route of the North Coast 500, had plans delayed by a year due to Covid-19. But despite the challenges presented by the pandemic closures, the underlying premise for the business remained clear, and with domestic travel restrictions easing first, the appetite for a high quality, authentic hospitality experience (and the desire amongst customers to interact with real people) only increased.
The company has a key focus on sustainability at every stage of its business, from supporting local producers, wherever possible, through to the provision of employment opportunities within the local community and implementation of the Scottish living wage. It is an example of the best of hospitality and business practice.
Another valued client, the TBC pub company, took over the Crusoe Hotel at Lower Largo in the Spring of 2021. The historic local landmark had been placed into administration but is now back at the heart of its Fife community with seven of its bedrooms currently renovated and providing a great harbour side setting and sea views for locals, day trippers and those staying over.
There are, of course, further challenges ahead for the leisure sector, with increasing operational costs, competition for staff, and data from the Scottish Tourism Alliance suggesting that the cost-of-living crisis is hitting the domestic tourism sector hard.
By raising interest rates the Bank of England may be trying to encourage a more prudent approach to consumer spending, but there is a balance that needs to be struck if we are to support our domestic hospitality and tourism market, which is so important to the Scottish economy.
For each of us it’s a matter of choice about how we spend our hard-earned money and while many, myself included, will have done so on the likes of Netflix and Disney during long periods of isolation from the rest of the world, it is to be hoped, and it is certainly my intention, to spend more time and money supporting the local hospitality sector, whatever the economic clouds.
Katie Corrigan is a senior legal director and head of real estate at Edinburgh-based legal services business, Vialex