Corporate

How can hotel and tourist business rise to the challenges and make the most of the opportunities currently facing the sector? As part of our BInformed spring seminar programme, industry experts Marc Crothall, Chief Executive of the Scottish Tourism Alliance (STA), Nicola Taylor, Managing Director of Chardon Trading, and Stuart Drysdale, Associate Director at Christie & Co, gave their views on the topic in a panel discussion led by Katie Corrigan and Euan Tripp, two members of Brodies’ hotels team.

During the discussion, a number of key themes emerged:

Skills shortage

A job in the hospitality and leisure sector, despite the opportunities it presents, is still seen by many as a temporary stepping-stone rather than a permanent career. This perception, combined with growth in the Scottish tourism sector, has led to a growing skills shortage. Recent research by KPMG suggests that 60,000 new employees are needed every year to fill that gap. With Brexit raising questions about the future status of around 20,000 EU nationals working in the sector in Scotland, the potential for a serious skills shortage is growing and continued investment in training and development is needed to improve the perception of a career in hospitality.

We heard from Marc Crothall on the focus of both Tourism Scotland 2020 and the national Tourism Skills Investment Plan on skills development and, in particular, raising the attractiveness of the sector as a career choice.

Nicola Taylor talked passionately about the fact that hospitality is a people business. While in some areas there may be less interaction with people and more with machines, what visitors are looking for is a positive experience and people are key to delivering this, she explained.

For business and individuals concerned about the status of EU nationals post-Brexit, there are steps that can be taken now. Lynne Marr, a partner in our employment team, has been advising employers and EU nationals on applying for UK residency and the importance of doing so now, while we are still in the EU. For more information contact lynne.marr@brodies.com or visit Brodies’ Brexit Hub.

Increase in costs

The seminar heard that rising utility costs, business rates and the national living wage are putting a strain on businesses across Scotland, with the panel describing the combination of factors as a “perfect storm”. In rural locations, where a living wage is unaffordable and there are fewer available staff, hoteliers are struggling to open their doors despite a clear demand from visitors. The popularity of Airbnb is also hitting rural businesses in some areas by reducing the number of properties available for staff accommodation. The panel discussed the Barclay Commission review of business rates and the need for a more fundamental review of the way hospitality businesses are rated and assessed.

Market disruptors

The panel was sanguine about the impact of Airbnb and serviced apartments. Serviced apartments perform well in the right location; and the view on Airbnb is that its main appeal is to the younger visitor. However, we have an ageing population and what it wants is to be looked after by (preferably professional and motivated) people. It was agreed that regulation of the Airbnb sector is required, for reasons of safety and to help level the playing field.

Technology

As the hospitality sector struggles in the face of rising costs and a growing skills gap, the panel discussed the on-going importance that technology will play in the future and the place of automation in reducing costs and filling the skills gap. With cities across Europe investing heavily in smart-ticketing and other technologies to improve the tourist experience, Scotland will need to follow suit to deliver a similar level of integration and quality of experience for future visitors.

Infrastructure

Scotland continues to attract a vast number of visitors from across the world with offerings such as the North Coast 500, but ageing infrastructure and limited public facilities threaten to damage the quality of the tourist experience and the capacity for towns and cities across the country to welcome new visitors. Greater investment in transport infrastructure, digital communication and visitor facilities is needed across the country to maintain Scotland’s position as a world-class tourist destination and to meet growing demand.

Brexit

In addition to the skills issue mentioned above, the main Brexit point discussed was the impact that the vote to leave the EU has had on visitor numbers. Whilst there has been a boost from overseas visitors enjoying the benefits of the weaker pound, Stuart Drysdale said that there is evidence that the weak pound has led to a fall in staycations. The explanation for this appears to be that the average foreign summer holiday is now costing so much more that Brits are foregoing an additional UK break to offset this increase in expenditure.

In summary, the panel was frank about the challenges facing the sector but positive about the outlook. It was clear from the industry experts and the questions posed by delegates that the underlying reasons for visitors to come to Scotland remain, that there is the drive within the industry to tackle the challenges and that this process is underway and in good hands with the STA and businesses across the country striving to provide a quality visitor experience in the face of political and economic uncertainty.

Katie Corrigan

Katie Corrigan

Associate at Brodies LLP
Katie is an experienced real estate lawyer, specialising in hotel and leisure purchases, sales, leases and management agreements. She acts for a wide range of clients including financial institutions, property developers, landlords/tenants and private investors.
Katie Corrigan

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