Crieff Hydro rocked by redundancies as virus crisis rips through Scottish tourism industry

The redundancies would amount to around one quarter of the group’s workforce across its seven hotels. However, the company said it would strive through consultation to reduce the level of compulsory redundancies, and held out hope that the process would ultimately lead to less than half of the 241 posts being cut.

Chief executive Stephen Leckie said the move was a dark day in the family-owned chain’s 150-year history.

He said: "When we closed our doors at the end of March, it was one of the darkest days in our 150 year history and this is another. The impact coronavirus has had on our industry and business has been immediate and drastic. As a family-run business built on the strength of our people, discussing potential redundancies is the toughest step we’ve ever had to consider. I am personally devastated for every one of our team who could lose their job."

READ MORE: Staff at five Scottish hotels, including Grand Central and Kimpton Blythswood Square, told they are at risk of redundancy amid coronavirus crisis

The proposed job cuts at Crieff Hydro, whose portolfio includes Peebles Hydro in the Borders and the Ballachuillish Hotel in the West Highlands, come as the tourism industry braces itself for mass redudancies in the wake of the coronavirus crisis.

With the majority of hotels, pubs and visitor attractions having had no income since the country went into lockdown, there are growing fears that many businesses will go to the wall as soon as employers are expected to start picking up the wage costs of furloughed staff from August.

Industry figures argue that the support provided by the Scottish Government so far has not been enough to prevent businesses from going under.

READ MORE: Scott Wright: Time running out to save summer for Scotland's crisis-hit tourism sector

Last week staff at the Kimpton Blythswood Square and Grand Central hotels in Glasgow were told they are at risk of redundancy as luxury operator InterContinental Hotels Group (IHG) moved to restructure its teams in Scotland in light of the crisis.

The impact of coronavirus was also cited when long-established Scottish tour operator David Urquhart Travel, which employed 57 staff, ceased trading last month. 

Mr Leckie said:  “Throughout this process we’ve done everything we can to look after our people. But despite all the measures we’ve taken so far to reduce costs, we anticipate that when we do open, bookings will be down by 30-50 per cent for the best part of a year. This will amount to a revenue loss of at least £17 million (50%) in the current financial year. 

"For every month we’ve been closed with zero income, we’ve had to pay £500,000 just to keep our buildings safe and insured. This would have a profound effect on any business.

“To try to navigate our way through this crisis, we’ve made use of the Government’s Job Retention Scheme as well as securing an additional £5m in loans from our bank to give us the best chance of survival when we are eventually allowed to reopen. This comes with a heavy financial burden but is the only way forward to rebuild the business and protect the remaining jobs.

READ MORE: David Urquhart hotels for sale as travel business is wound down

“We know that we have many loyal customers who visit us year after year, so we hope the recovery is quick and we can welcome families back to our own family of hotels in the coming months. The effects of this pandemic can’t last forever and our long-term vision is to rebuild the team in the future when business returns.”

Marc Crothall, chief executive of the Scottish Tourism Alliance, said: “This is a harsh reality of the impact of Covid-19. Crieff Hydro is a really good, well-run and managed group of hotels who have always invested in their employees and I know it will be hurting the family in having to take this action.

“But without any income coming in for many months and coupled with high levels of monthly fixed costs and with no sign of any long-term grant support being made available to help bridge the gap in the months ahead as tourism demand and occupancy levels return, businesses like this are now faced with little or no choice but to cut employee costs.

“Furlough, whilst it’s been a massive intervention and support, is still a cost to businesses and to protect their long-term survival and ability to trade their way out of this crisis to create many more jobs in the future, very sadly tough decisions like this have had to be taken. I suspect we will be hearing similar stories from many more tourism and hospitality businesses in coming days.”

Willie Macleod, UK Hospitality director in Scotland, said: “Unfortunately, this is not the first such announcement and we expect is likely to be followed by many more. Hospitality businesses in Scotland have been starved of revenue for almost three months at a time of year when they would otherwise be extremely busy.

“Instead they are closed and burning cash to meet unavoidable fixed costs; this is an unsustainable position and it comes as no surprise that businesses have to take action like this in an attempt to survive until they are able to reopen on a viable basis. Hospitality businesses greatly value their experienced and loyal teams and have gone to great lengths to avoid the position that Crieff Hydro now finds itself in.”