THE chief executive of Glasgow-based Chardon Trading has warned the hotel industry is facing a challenging future because of an over-supply of rooms, as the firm reported a steep fall in profits for its most recent financial year.
Nicola Taylor, whose firm owns six hotels trading under Holiday Inn brands in Glasgow, Edinburgh, Perth and Dunfermline, said the glut of hotel development in Glasgow city centre is making it increasingly difficult for operators to compete.
And she declared Glasgow’s success in attracting major events, which provide hoteliers rare opportunities to charge full prices, is masking the underlying trend of lower-room rates driven by the increased competition.
The city will this month host the Celtic Connections music festival, while in September it will hold a major United Nations (UN) climate change summit, known as COP26 (26th Conference of the Parties).
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Figures released by Glasgow City Council last May revealed there were 22 hotels in the planning pipeline, a figure likely to have increased in recent months after plans were disclosed for yet more projects in the city. These include plans for hotels in the former C&A department store on Sauchiehall Street, and in the Teacher Building on St Enoch Square.
The projects in the planning come on top of the 1,050 rooms added to the city over the course of 2017 and 2018.
Ms Taylor’s comments came as new accounts for Chardon, due to be lodged shortly at Companies House,will reveal a 10.9 per cent fall in profits to £2.3 million in the year to the end of April.
The accounts will also show that revenue at Chardon, whose portfolio includes French brasserie La Bonne Auberge at its Holiday Inn Theatreland in Glasgow, was 0.6% lower at £17m.
In a statement issued on the accounts, Ms Taylor said the company, whose parents established the business in 1973, was “in no way surprised with these results”.
READ MORE: Revealed: Glasgow hotel expansion gathering pace
Ms Taylor, whose firm employs around 250 people, said: “Challenging economic cost factors in Scotland, as well as the UK and globally have clearly impacted our performance.
“Together with major one-off events across Scotland in recent years which have camouflaged the reality of the Scottish hospitality landscape, the apprenticeship levy, increased property rates and the living wage, which has increased by 23% in just four years, have all had an impact on our bottom line. “Other significant factors including continuing political uncertainty, a weaker pound and the growing popularity of Airbnb have also had an effect. Most notably, however, is that fact that in the six decades in which Chardon has operated, we have never seen such over-supply in the marketplace and now with confirmation that more new hotels in key locations in which we operate are set to open in 2020, it makes for a future which can only be described as challenging.”
READ MORE: Hotel plan revealed for Glasgow’s C&A building
Scottish ministers this week outlined plans to crack down on Airbnb-style lets amid growing concern over their impact on communities. The SNP said it would bring in a licensing scheme, with housing minister Kevin Stewart also pledging to review the rules around their taxation.
Ms Taylor said: “Naturally it is good to know the matter is finally being dealt with, however as yet we have no idea how individual councils might deal with this. “On the whole, anything that brings about a more level playing field commercially is good news for the hotel industry.
"Currently hotels pay 20% VAT and 6% -7% property rates on every £1 sale, so it will be interesting to learn more about the proposed new tax to be levied on short-term lets, the amounts to be levied, how the process will be managed and penalties for non-compliance with licensing conditions.
“Additionally, and most importantly, the requirement for Airbnb/short-term let properties are to be licensed retrospectively and adhere to the same stringent consumer safety regulations as hotels can only be great news for guests.”
Mr Stewart said: “Short-term lets can offer people a flexible travel option and have contributed positively to Scotland’s tourism industry and local economies across the country. However, we know that in certain areas, particularly tourist hot spots, high numbers of short-term lets are causing problems and often make it harder for people to find homes to live in.”
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