By Scott Wright

THE Scottish hospitality sector is at risk of “going dark” this winter, with venues staying closed over Christmas and Hogmanay, if the support pledged by government to support the industry through the cost crisis is not delivered as urgently as possible.

Kate Nicholls, chief executive of industry body UKHospitality, warned last night that the sector was in the midst of a “real-time crisis” that is “deteriorating” on a daily basis.

Ms Nicholls noted it had been “really heartening” to hear Prime Minister Liz Truss and Chancellor of the Exchequer Kwasi Kwarteng “singling out hospitality as a major cause for concern” in Parliament this week, amid spiralling energy prices and the cost-of-living crisis.

She welcomed the six-month scheme announced by Ms Truss on Thursday to shield businesses from energy price hikes, as well as the promise of “ongoing, focused support for vulnerable industries” thereafter.

But Ms Nicholls declared the industry must be informed of the scale of the energy support and other aid for the sector as soon as possible.

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While recognising that government and parliament are currently suspended because the UK is mourning the death of the Queen, Ms Nicholls told The Herald: “We need to see the detail of that. The scale of the challenge that is engulfing the sector is big, it is real and it is happening now.

"This is a real-time crisis, it is a daily deteriorating situation and we need to get the details of what that package means for those businesses and what support might be looked at understood as quickly as possible.”

Ms Nicholls said the predicament facing the hospitality sector is particularly acute in Scotland, where she noted that Covid restrictions were in place for longer and where businesses in remote rural areas have shorter trading seasons compared with other parts of the UK.

Many UKHospitality members in Scotland have been telling her they are “really facing a crisis, that there was a danger of businesses closing and the hospitality sector going dark temporarily over winter, particularly in those rural parts of the Highlands” that are struggling. Some businesses will stayed closed over Christmas and New Year.

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Ms Nicholls said: “I think in Scotland, actually, it is worse than the pandemic, just because of the nature of the businesses. The fact that it is a shorter season in Scotland, in parts, than it is in the rest of the UK, and you do already have businesses that struggle to break even during those quieter winter months, who are therefore having no choice but to close down to protect the business and avoid the energy costs.

“You have got a very real prospect of hospitality going dark across Scotland over the winter. A lot of operators have said to me they are not planning to do Christmas, they are not planning to do Hogmanay. To not have Scottish Hogmanay in many parts of the country tells you how difficult it is for these businesses to keep afloat.”

Ms Nicholls said the organisation was already seeing businesses “handing back the keys” to premises because severe costs mean it is no longer viable to trade.

She said: “We are seeing a sharp uplift in closures. We are seeing it in insolvency statistics and below the radar, where people are just handing back the keys.

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"That is where the real danger exists in Scotland, because some of those businesses haven’t yet had the benefit of recovering from Covid. They were closed for longer, they had restrictions in place for longer, and the international visitors haven’t returned. There are also more seasonal businesses in the Highlands and the more rural areas of Scotland. They are in a quite fragile state.”

The most recent survey by UKHospitality found that 60 per cent of its members were looking to cut back on trading hours, or close at certain parts of the week or times of the year. Four in 10 businesses in Scotland said they had already cut their headcount, while one in five said they were no longer viable and did not think their business could survive the winter without additional support.

Ms Nicholls said: “It really is a matter of urgent intervention to avoid both closures and job losses… and persistent economic scarring. It is about cash support to help them to be able to survive. It is not about providing the headroom for growth and struggling through with price interventions. It is going to need price and cash support. We would urge VAT and business rate relief… we are starting to see closures already.”

Asked what form of support government ministers were contemplating for the industry, Ms Nicholls said it was unclear at this stage.

Noting that the scale of the energy support was also currently unknown, she said: “All we know is that it is going to be energy and additional support, and that there are a range of options that are being worked through by civil servants, and that the industry has presented. The industry has referenced VAT (valued-added tax) and business rates relief as the quickest and easiest way to get relief to all the businesses that need it. Other options are under consideration but we don’t know the detail of that yet.”