Moray Chamber of Commerce says it has had “terrifying conversations” with hospitality businesses “on their knees” as a slew of economic storms batters local companies.
As well as the hospitality sector, the chamber is warning “walls are closing in for all businesses” and if support is not forthcoming “there won’t be any businesses left.”
‘Imperative’ support is given
The Chamber’s dire predictions come after it recently met 15 hospitality representatives from around the region noting it is “imperative” support is given urgently to struggling businesses.
The group has written to MSPs Richard Lochhead and Douglas Ross, as well as the Scottish Chamber of Commerce and Moray Council warning businesses are at “breaking point,” following Covid lockdowns, servicing increased debts, inflation and soaring energy costs.
The letter from Moray Chamber of Commerce chief executive officer Sarah Medcraf says: “If there is no profit, there is no capital investment in products.
“Trading conditions have never been so tough because businesses are feeling the pressure from all angles and believe they have nowhere to go.
“All sectors are feeling the storm of the trading conditions, but understandably some
more than others. The hospitality industry is on its knees from a lack of available staff, rising costs from everything from energy to food to coffee and it needs support now.”
The CEO notes VAT for hospitality was cut during the pandemic and has spoken to some businesses who used the reduction in the tax to trade their way out of Covid, using the savings to pay off borrowing.
Ms Medcraf is calling for a reduction in VAT for the hospitality and leisure sector as a “priority,” especially when consumers are spending less due to their own cost of living crisis.
Some hotels mulling closing for winter
The chamber boss also pointed to companies witnessing an increase of almost 400% in energy bills, with some hoteliers even now making the decision whether or not they close for the winter as it may be cheaper to do so.
“This has a detrimental effect not only on our tourism economy but confidence in these establishments locally especially when they provide local employment,” said Ms Medcraf.
“Along with other trade organisations, Scottish and British Chambers of
Commerce have repeatedly called for a cap on fuel rates so businesses can have a small amount of comfort they can budget and forward plan their operations. To date, sadly, these calls have been ignored.
“As the winter comes in we will find people will go out for coffee to save putting the heating on at home, as businesses will need to heat their premises. However, we’ve already had reports from the hospitality industry of the average order value falling, people opting to share meals.
“This is not a sustainable business model and strong intervention from government is required to support the whole business community.”
Ms Medcraf also put the thorny issue of business rates firmly in the cross-hairs, calling them an “unfair” and “outdated” system which needs reforming, while rising prices in raw materials, food and labour is a storm many businesses cannot weather.
The Chamber accepted some issues fall to the UK Government and others to its Scottish counterparts, but is calling for both administrations to unite in understanding just how much pressure businesses are under.
One Moray hospitality business which preferred to remain anonymous echoed the chamber’s concerns, particularly with regard to a VAT cut “at the very least” to help the sector.
Public don’t realise how much pressure businesses are under”
Moray hospitality business
The business said: “Times are very challenging. I think it will get a lot worse and we’re not hearing of any real business support coming down the line, a VAT cut at the very least really is what is needed.
“The general public don’t realise or are considering how much pressure most businesses are under just now, losing smaller businesses will affect our communities; choice, friendliness, service, employment, small things like donating raffle prizes for charity events, to name but a few.
“Bigger businesses and chains don’t seem to help out as much and have large pockets, small businesses rely on monthly turnover and really need the support of the community.”
Conversation