Hotels may close for good under weight of debt
Warning of things to come: hotels may shut permanently
A decade of hotel expansion across Scotland is set to be reversed as many hotel businesses struggling with unsustainable debts, losses and staffing problems decide to close permanently, a restructuring expert is warning.
Citing industry reports indicating the scale of the financial and resourcing problems affecting the sector, Derek Forsyth, head of restructuring at Azets, said that 10% of Scotland’s hotels could be forced to shut permanently by 2023.
He noted analysis by UKHospitality that the sector has £2.5bn in rent arrears alone due to the pandemic, further compounding the millions of pounds borrowed through the various Covid loan schemes made available last year.
Within hours of his report being published it was announced that the owner of the 102-bed Lorne Hotel in Glasgow has fallen into administration with the loss of 30 jobs.
A new survey by The Scottish Tourism Alliance pointed out that 89% of hotels have up to 10 staff vacancies, highlighting the scale of a growing recruitment problem. In addition, the latest survey from Market Recovery Monitor has disclosed that nearly 10% of UK restaurants have closed since the pandemic.
“The hotel sector is probably going to be just as severely affected during the next 18 months,” said Mr Forsyth.