BREXIT, a PLH renewal ‘crisis’, business rates and the potential introduction of a tourist tax are among the biggest threats to the prosperity of the on-trade in the year ahead, according to trade bodies and business groups.
With less than three months to go until the UK is due to leave the bloc (March 29, 2019), the protracted Brexit negotiations have fuelled uncertainty, say groups, who told SLTN the lack of information over the future relationship with the EU threatens the stability of – and future investment in – Scottish hospitality businesses and their ability to recruit staff.
Julie Dunn, president of the Scottish Wholesale Association, said Brexit “remains the elephant in the room”.
“If it goes ahead, my own view is that it will be damaging – and deal or no-deal will only affect how much so,” she said. “Already there have been signs of a downturn in EU job applications, which will cause staffing problems.
“It may also destabilise investment and drive up inflation, which will hurt operators who are already being squeezed, compounded by the addition of tariff/non-tariff barriers affecting costs and the general operation of the supply chain.”
Colin Wilkinson, managing director of the Scottish Licensed Trade Association (SLTA), said the Brexit negotiations “have deteriorated into nothing but a ‘bun fight’ amongst all politicians and we still have no clear direction on where we are heading”. “The ability to maintain employing current European workers is a huge issue in addition to having access to more European workers in future,” he said.
Andrew McRae of the FSB said the “endless uncertainty has certainly hit business confidence for six”, adding that the government must do all it can to avoid a no-deal scenario, which he said would be “the worst possible outcome” for Scotland’s pubs.
Beyond Brexit, there is continued anxiety surrounding the first ‘tranche’ of PLH renewals, with those whose personal licence expires on August 31, 2019 having until May 31 this year to submit their renewal application.
Concerns have been voiced from across the industry of a renewal crisis similar to that of the refresher training debacle in 2014, with groups and licensing lawyers urging PLHs to submit their renewal applications as soon as possible.
And, as reported in SLTN (December 8, 2018), the Scottish Government has admitted that if boards become overwhelmed with renewal applications submitted close to the deadline, and are unable to process them in time, licences will still expire.
Kate Nicholls, chief executive of UK Hospitality, urged the Scottish Government “to continue to make licensees aware of the deadline, otherwise there is a risk that smaller businesses may miss out”.
Addressing imbalances in the business rates system remains high on the agenda again this year, according to Wilkinson of the SLTA.
He said the industry “needs to operate on an equal footing with other business sectors”.
Additionally, the potential introduction of a tourism tax – both in Edinburgh and the Highlands – has been slammed by trade groups.
Marc Crothall, chief executive of the Scottish Tourism Alliance (STA), has called on the Scottish Government to oppose any form of a tourist tax – stressing that “there is a misconception of a buoyant industry” when in reality “hotels across the board are reporting declining profits”.
Operators also want to see greater government support for the sector.
Alan Russell, an East Lothian-based multiple operator, said the Scottish Government must address the “unfair” business rates system.
“They need to reform it and make it a better playing field on the way they rate us,” he said.
Ian Watson, owner of the Cullen Bay Hotel in Moray, described the current rates system as “diabolical” and said “it absolutely needs to be overhauled”.
“The Scottish Government’s answer to all this is they’ve taken so many businesses out of having to pay [rates],” he said.
“But how is that fair? They just put the burden on other small companies; I think everyone needs to contribute equitably.”
Despite challenges, however, there is some confidence about 2019.
Wilkinson of the SLTA said, Brexit aside, the group is “more optimistic for 2019 than last year”; its most recent market review found nearly one in two licensees reporting growth for the first time in a number of years.
Nicholls of UK Hospitality said: “Provided we get the right support from both central and devolved governments, then businesses can continue to evolve and be successful.”