Business / Coronavirus throws tourism sector into deep crisis
Summer tourist season effectively called off
THE LOCAL tourism industry is already counting the cost of the coronavirus pandemic with many operators and accommodation providers fearing that there will be no tourist season at all this year.
Accommodation providers, already hit by disappearing income from the oil and gas sector, are now faced with the bleakest of bleak outlook for the summer.
On Thursday, the multiple award-winning Scalloway Hotel went into administration blaming the downturn in the oil and gas sector as well as the impact of Covid-19. Many in the industry now fear that other hotels, guesthouses and self-catering providers may also not survive the coming months.
Everyone in the industry Shetland News spoke to over the last couple of days described the situation as “devastating” and a “nightmare”. Dozens if not hundreds of jobs will be lost.
With a very short summer season most tourism providers in the isles depend for their annual income on those few busy months from the middle of April until the Shetland Wool Week in autumn.
Robert Smith of Brudolff Hotels said that for the tourism industry the coronavirus outbreak couldn’t have hit at a worst time.
The industry was now facing “three winters in a row”, a situation not many would be able to survive, he said.
And while there is general appreciation and gratitude for the way and the speed the government reacted to the crisis, there are doubts as to whether grants and tax relief will be available sufficiently long enough to tie over businesses and self-employed traders until the country emerges from the ongoing crisis.
Smith said: “Everybody in the industry was looking forward to a pretty decent summer period in Shetland but we now face effectively 13 months of winter with the first three or four months without turnover whatsoever, and the rest will, no doubt, be poor and sporadic at best.”
Brudolff Hotels runs the Lerwick, the Shetland and Kveldsro hotels, all based in Lerwick. Smith said tour operators had so far cancelled everything up to June.
“The more organised companies are not cancelling everything,” he said. They are cancelling three months ahead, so there are still one or two bookings for August and September, but that’s just a few, and we all know fine well that once we get into May, they will be cancelled as well.”
Busta House Hotel manager Grant O’Neil agreed that the season has effectively been called off as he continues to deal with cancellations on a daily basis, a situation he describes “as entirely understandable as people’s safety is absolutely paramount at this time”.
With the restaurant and the hotel closed, ten of the 14 staff have been put “on furlough”, meaning they will get 80 per cent of their wages paid for by the government jobs’ retention scheme, which is expected to be up and running by the end of April. The company won’t any seasonal staff.
O’Neil said that due to the recent changes in the rates evaluation, Busta House was not eligible for any grant support under the Scottish Government’s coronavirus business support fund.
“Due to the overinflated rates we have to pay now we are not in one of the brackets for any of the grants that are available,” he said.
“We have a skeleton staff of four here only because we are still running the take-away as a service to the local community. The main reason to do that is to provide some form of normality, and a bit of positivity to give to the local community.
“Everybody who I have spoken to in this industry is hugely concerned.”
Referring to the dramatic downturn in oil related business during the quieter winter months; O’Neil said Busta House and many other providers in the north have had an “entirely different winter trade” than what everybody once had.
“We had been hoping to recover from that with a good tourism season by bringing more people in now and more people later – but now we have had a quiet winter followed by a non-existent summer season.
“It will have a huge impact on all of us, not just the hotel and hospitality sector but the whole islands, unfortunately.”
Busta House Hotel is not the only business that can’t access government assistance. There was an outcry earlier this week when it emerged that the self-catering sector was also excluded.
Local politicians have been lobbying the Scottish Government and the expectation is that self-catering businesses will eventually be included in the hospitality support scheme but a final decision has not been made yet.
Steve Henry, who together with his wife Gillian run Self-Catering Shetland, said they were dealing with a flood of cancellations, adding that managing customers’ expectation of instant refunds was adding to the administrative nightmare.
“Everybody is cancelling, it’s just been one day after the other, it’s just cancel, cancel, cancel…right into June,” he said.
“You just don’t know for how long it is going to last, and right now self-catering is not provided with any kind of help.”
Tour guide James Tait of Island Trails said he is working on the presumption that there will be no tourist season this year.
“I am not expecting to have any tours in the first half of the season, and probably very little for a long while,” he said.
“My business has been badly affected but a lot of other people’s businesses as well, it is not just tour guiding or tourism, and we have to put the health and wellbeing of the community first.
“We will all be making efforts to keep our profile up in the hope that tourists will come back in 2021. I had quite a few folk rebooking from this year to next year – it is encouraging that people are not just cancelling completely.”
Tait said that once this was over – whenever that would be – it would take some considerable time for capacity and trust to build up again. It is not going to be “like switching a light back on”, he said.
Emma Miller of Shetland Tourism Association (STA) said the trade body’s strategy of growing the industry by £10 million to more than £33 million over the next few years to 2023 would now have to go “back to the drawing board”.
Its 56 members have been upbeat at the prospect of growing a sustainable industry based on Shetland’s attractions as a remote and distinctive island community in the North Atlantic, but all this has been shattered more or less overnight.
“Every possible aspect of tourism is hit by this, and I don’t know when we are going to come out the other end of it,” she said.
She said most of the STA’s members were small operators many of them were self-employed.
With the start of the season just around the corner tour guides and other self-employed people were looking forward to earning the money that sees them through the winter.
With grant help for the self-employed announced by chancellor Rishi Sunak on Thursday, some short-term stability is likely to be provided, though – as always – the devil will be in the detail.
“I think the government has done as best they can in the circumstances, they have come with all these support measures fairly quickly,” Miller said.
“It certainly hasn’t been an easy exercise for them, but I am concerned about where all this money is coming from, and for how long it is going to be available depending on for how long this crisis carries on for.”
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