NOT every Scottish hospitality company has the assets, reputation, and financial strength of the Crieff Hydro group of hotels.

So when its chief executive says it will be as difficult to make a profit in the current financial environment as it was during the depths of the pandemic, it is a startling state of affairs.

Stephen Leckie, fifth generation of the family who have run Crieff Hydro since it was established in 1868, set out the profound challenges currently facing the Scottish tourism and hospitality industry as costs spiral ever upwards, and consumer spending falters, in an interview with The Herald this week.

He was speaking as the company, which owns eight hotels across Scotland, posted a return to profit for the year ended February 28 – albeit with significant qualifications.

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Mr Leckie, who chairs the Scottish Tourism Alliance and is the current president of Scottish Chambers of Commerce, said the £3.1 million profit made by the company (which followed a £3.2m loss the year before) had been possible because of relief from business rates and a lower rate of value-added tax, measures brought in by government to support the industry through the pandemic. Underlying trading, he said, had actually been subdued.

Now things are a good deal tougher for everyone in the industry. While attention is rightly focused in wider society on the cost-of-living crisis, Mr Leckie said there is a “cost-of-doing business crisis” too. That is borne out by the surging costs companies are facing on the energy front and also with regard to food, drink, recruitment and other services.

This comes as inflation, which climbed to 10.1 per cent in July and is expected to become significantly higher still, is shaking consumer confidence to the core, which in the context of tourism and hospitality is leading guests to spend less on food and drink, and to people frequenting hotels, bars and restaurants less often.

To compound matters, the support that has been there for the industry in the shape of reduced VAT and business rates relief has been withdrawn.

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Worryingly, Mr Leckie expects this unwelcome mix to lead to businesses closing their doors for the last time, or perhaps planning to close over the winter months – an echo of what occurred on a widespread basis in 2020.

Mr Leckie also made a salient point about profitability during the interview. Without the capacity to generate profits, businesses are unable to make the investment required to ensure their properties are not just maintained to a basic level, but appealing in a fiercely competitive international market in which consumers are thinking very carefully about where to spend their money.

He emphasised that the primary motivation for his family and senior leaders was not to line their pockets, but the “pride” they take from seeing the business continue to appeal to guests – a century and half on from when it was first established.

Of course, while it would be wrong and unfair to downplay the impact of the current economic challenges on Crieff Hydro, a business of its magnitude is likely to have greater capacity to weather the current storms than the thousands of other, much smaller businesses.

Having struggled through months of lockdown and coronavirus restrictions, the owners of thousands of small and medium-sized enterprises (SMEs) in Scotland are now extremely worried about rising energy bills and other increasing costs.

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It was encouraging this week to see the Scottish Government back calls from the Federation of Small Businesses for an energy price cap to be extended to small firms following an emergency summit with industry leaders at Bute House on Tuesday.

The Scottish Government said after the meeting in Edinburgh that energy price rises should be scrapped and that the UK Government should act to protect SMEs, and other organisations not covered by the price cap, from rising energy costs. It also said there should be support for businesses and households to meet current energy bills.

Andrew McRae, policy chair of FSB Scotland, said the organisation was “relieved” to see the Scottish Government supporting measures it has been calling for, which also include a cut in the main rate of VAT on non-domestic fuel bills to 5% from 20%, and for any unused Covid grants to be repurposed to help small businesses struggling with energy and other costs.

“Our members are not large multinationals with the ability to absorb cost hikes or indeed negotiate terms with their suppliers,” he said. “They have bargaining power akin to that of a private consumer, so should enjoy the same protections.”

While the vocal support of the Scottish Government will be welcomed by worried business owners and households, time is in short supply.

It may be the preference of the Conservative Party to wait until its new leader (and by extension the next Prime Minister) is elected in September before taking meaningful steps to address the energy crisis. But such prevarication is deeply frustrating for people and business owners who simply do not know how on earth they are going to be able to afford to heat their homes and premises over the winter.

The profound urgency of the crisis is underlined by British Chambers of Commerce, which argues that the UK Government is “running out of time to offer businesses and households the support they need”.

The organisation, which says the “cost-of-living crisis and cost-of-doing business crisis are two sides of the same coin”, has written to the Prime Minster and Chancellor of the Exchequer today proposing a five-point plan to provide “vital” support to firms. The proposals range from a temporary cut in VAT to 5% to Covid-style emergency support grants.

“The BCC’s five-point plan is not solely about ensuring support for businesses. It is also about protecting jobs, securing livelihoods, and creating a vibrant and prosperous society for everyone,” said Shevaun Haviland, director general of the BCC.

“Good business is good for our communities, and we must support firms and the individuals that run them to ride out this economic storm. In June, we gave the Government until the autumn budget to get its house in order, but the latest economic projections released since then have been worse than expected.

“We simply cannot afford to see another month of the same old news.”

The business community is right. If government fails to act decisively now, the impact on companies and consumers will be catastrophic.