THERE is mounting anger in the hospitality industry over the operation of a flagship £14 million Scottish Government fund to support larger hotels through the coronavirus crisis, amid claims of a lack of transparency over how the grants are distributed.

The Hotel Recovery Programme was hailed as a step to secure up to 3,000 jobs in large hotels until the start of the 2021 tourism season when it was launched in late July. It opened up the chance for hotels in Scotland to apply for individual grants of up to £250,000, alongside a “suite of wrap-around business support and advice”.

The criteria for eligibility states that hotels must be based in Scotland, employ at least 50 people, have a rateable value of more than £51,000 and provide jobs that are critical to the local economy and the recovery of the tourism sector.

The £14m fund was split by ministers between £9m of revenue support and £5m to be used for capital expenditure.

However, hotel owners say applications have been refused at the first stage of the process despite meeting the criteria. And they argue the rationale provided in letters of rejection is not sufficiently clear.

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The owner of one city centre hotel that meets all the criteria, who declined to be named, said: “We have 100 employees. On what basis did we miss the cut?

“The question is: who is the funding going to, and on what criteria? Why were we not given the opportunity to make a case?”

Industry figures say mid-market players, which account for a large part of the hotel industry in Scotland, have effectively been frozen out of the coronavirus grant support provided by the Scottish Government. While small operators trading from premises with rateable values between £18,001 and £51,000 have been eligible grants of £25,000, huge numbers with rateable values above that threshold have received nothing. This is in spite of having to maintain overheads against a backdrop of severely constrained trading conditions. A 16-day closure on bars and restaurants has been in force in the central belt since last Friday, while hotels are not permitted to serve alcohol to residents after 6pm.

One operator noted that many hotels have received no support despite the government closing down many of the businesses that provide a natural flow of trade, such as concert venues and conference halls.

Another source, who was also refused at the first hurdle, said mid-size hotels “have been left in limbo”. He added: “The mid-size hotels are not getting anything. It would be good to know who is getting the funding and why.”

In one letter of rejection seen by The Herald, Scottish Enterprise, which is leading the programme on behalf of the Scottish Government, said interest in the funding “has been extremely high, with the level of demand far exceeding the capacity of the programme”. It adds that it has “only been possible to progress less than 30% of EOIs (expressions of interest) to the next stage.”

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But the hotelier in question said the government should have been able to anticipate the level of interest across the industry before “teasing” the prospect of grants of up to £250,000.

Willie Macleod, director of UKHospitality, said the value of the £14m fund was “totally inadequate” given that 200 expressions of interest from companies representing more than 300 hotels in Scotland were anticipated to have been made. And he said the “lack of flexibility” over how the deployment of the two components of the fund was not helpful.

Scottish Enterprise has yet to begin distributing grants. It is understood initial payments will begin to be made to successful applicants at the end of October.

Scottish Enterprise said in a statement: “Following a review of the expressions of interest and initial outreach undertaken during September agencies are now working closely with hotels on a package of bespoke support as part of a holistic programme that will continue until March 2021.

“The Hotel Support Programme was heavily oversubscribed and agencies prioritised support on the basis of employment secured.

“Those who were not successful were informed last week and all received an offer of follow on advice and support, including on potential alternative funding opportunities, where required.

“We appreciate it continues to be an extremely difficult time for the hospitality sector and are committed to doing everything we can to help wherever possible.”