By Scott Wright

THE chief executive of Crieff Hydro, the Perthshire-based hotel group, has declared there will be “significant closures” across the tourism and hospitality industry as it grapples with a barrage of soaring costs.

Stephen Leckie issued the warning as new accounts show that the company, which owns Crieff Hydro, Peebles Hydro and the Ballachulish Hotel, returned to profit in the year ended February 28.

The Crieff Hydro group made a pre-tax profit of £3.1 million for the period, following a loss of £3.2m last time, as turnover climbed to £28.6m from £12m – despite two months being lost to coronavirus restrictions.

However, revenue was 20 per cent short of pre-pandemic levels, with Mr Leckie stating that the results had been greatly supported by relief from business rates and a temporary reduction in valued-added tax for the hospitality industry.

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And he noted the current year was proving to be even tougher for the wider tourism and hospitality industry, which he said was mired in a “cost of doing business crisis”.

The energy bill for the Crieff Hydro Family of Hotels has rocketed by £1m to £1.6m, its insurance costs have risen by £400,000 to £1.1m, and it is now paying £1.5m a year in business rates.

The hike in costs has come as surging inflation has rocked consumer confidence, with the cost-of-living crisis leading hotel guests to spend less on food, drink and activities.

Fuel costs are also forcing people to question whether they can afford to travel to holiday destinations such as Crieff, while staff are worried about the cost of driving to work.

Mr Leckie said he speaks to business owners across the industry, from hoteliers to late-night operators, and noted that many are struggling to “take their figures” on revenue.

He told The Herald: “People have less money to spend; they are spending less on food, less on drink, less on discretionary spend, less on activities. The numbers are okay, but they are not what we want them to be.

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“When I say that I am not talking about my own business – [it is] the whole industry.

“That’s on the revenue front. On the profit front, this year is going to be as tough as Covid, as tough as lockdown, because of the costs.

“We talk about the cost-of-living crisis – this is a cost-of-doing business crisis as well.”

Mr Leckie, who is chairman of the Scottish Tourism Alliance and president of Scottish Chambers of Commerce, said business rates relief and the lower rate of VAT had “saved us millions”, noting that underlying trading “wasn’t good” last year. But the level of VAT applied to the industry has returned to 20 per cent from the temporary 12.5%, and business rates are once more being levied in full.

The profits made in the year to February 28 has will allow Crieff Hydro to reinvest £3m into its properties this year. But Mr Leckie said rising costs, allied to pressure on revenue, means its ability to reinvest in future has been severely curtailed.

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Asked how government could help, Mr Leckie repeated the industry’s call for a reduction in VAT, noting the UK had the second-highest rate of this tax in Europe. He also highlighted the impact of air passenger duty, which he said was the highest in the world.

Mr Leckie said that the number of tourists from overseas was 70% below 2019 figures, in part because of how expensive it is to visit Scotland. Taxes are high and the price of holidays and tours has gone up because of the increased costs faced by operators, he added.

“We are in a bit of a spin here,” Mr Leckie said. “We are happy to pay our way, so long as we are making money. But if all we are doing is working really hard all year just to pay the extra energy bills, just to pay the increased cost of doing business, just to pay tax and there is no profit, that means we can’t reinvest back into our quality.”

Referring to Crieff Hydro’s current financial year, Mr Leckie said the company will make only a “fraction” of the profits it made last year because of subdued trading and higher taxation.

And he warned increased costs will result in closures across the industry, with many businesses already working to reduced opening times because of higher costs.

Asked if he was aware of business owners deciding to close due to the pressures, Mr Leckie said: “Anecdotally, they are selling. Their businesses are on the market or [they are] deciding they can’t afford to open this wintertime.”

He added: “We will see significant closures.”

Crieff Hydro Limited employed an average of 736 staff over the period, up from 508 the year before.