FSB survey shows north Highland tourism businesses faring better than other parts of region
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Tourism businesses in the area covered by the North Coast 500 route seem to be coping better than those elsewhere in the Highlands and Islands, a new report has found.
The Highlands and Islands tourism survey from the Federation of Small Businesses (FSB) paints a worrying picture across the sector as a whole – but indicates a less pessimistic outlook in the northern Highlands.
David Richardson, the FSB's development manager for the Highlands and Islands, believes the NC500 is a factor in the north Highlands "outperforming" the rest of the region.
However, he warns that the area's tourism businesses cannot afford to relax. The lack of customers, especially from overseas, is "a real worry", according to Mr Richardson, while staff shortages have become "critical".
The survey, conducted between May 25 and June 4, focused on tourism and hospitality businesses within the Highlands and Islands Enterprise region – Shetland, Orkney, the Outer Hebrides, Highland, Moray, Argyll and Arran – and produced 290 responses.
It found that the eagerly anticipated staycation boom did not take place as soon as travel restrictions were lifted – leaving four in 10 businesses struggling to generate sales and profits (42 per cent), one in 10 "barely staying afloat" (nine per cent) and a quarter (25 per cent) feeling pessimistic about their chances of surviving until 2022.
The main concern cited by business operators was keeping up to date with government rules and regulations (64 per cent). However, four in 10 were worried about having too few customers and about travel restrictions.
Almost a half of employers did not have enough staff to meet their needs (45 per cent). And while 50 per cent were struggling to open as normal and get by, the other half had been forced to cut services or opening times or both.
A breakdown of the results within the HIE area reveals that the west was generally performing better than the east, the weakest performer was Shetland, and the best performer was the northern Highlands.
In the northern Highlands a quarter of businesses described themselves as doing badly (24 per cent), as against four in 10 in the region as a whole (42 per cent). As a result, north Highland businesses were generally less worried than their counterparts elsewhere about a range of issues.
However, concerns over keeping up to date with changing government rules and the impact of travel restrictions were in line with elsewhere – as were staff shortages, which were impacting more on businesses in the sparsely populated west than the east. Here, over four in 10 employers (44 per cent) were short-staffed, more in the west than the east.
Businesses were trying to recruit staff from wherever they could get them, and half had increased wages in bids to attract and retain staff.
Eighty-eight per cent of tourism and hospitality businesses in the north Highlands were optimistic about surviving until 2022 as against 75 per cent in the region as a whole.
The report calls on the Scottish Government to commit to a range of actions, including withdrawing the need for physical distancing and self-isolation once most of the adult population is fully vaccinated. It also calls on the UK government to pilot a remote visa for employers in the Highlands and Islands.
Mr Richardson said: “While the ambition has always been for the Highlands and Islands to have a truly mixed economy, the fact is that most of this vast region – and most of the northern Highlands – is dependent, directly and indirectly, on tourism.
"It sustains jobs and communities, and without its rich array of businesses and services the quality of life that we all enjoy would be vastly diminished. Tourism is everyone’s business, and it is in all our interests that it succeeds.
“The fact that so many businesses across the region described themselves as struggling is a matter of grave concern, and it’s no wonder that a quarter fear that they might not survive until 2022.
"This is the time of year when these linchpin businesses must build up the cash reserves needed to carry them through the long winter, undertake essential repairs and refurbishment, and start paying off any debts resulting from Covid loans. They simply cannot afford to be operating on ‘slow’.
“And while it is very good news that the northern Highlands is outperforming the rest of the region – presumably thanks to the NC500 – the fact that a quarter of businesses are pessimistic about their chances of surviving to 2022 is sobering. The northern Highlands cannot relax.
“The lack of customers, especially overseas visitors, is a real worry and the sooner travel restrictions are lifted the better.
“However, the concern that should be exercising minds most is staffing. Staff shortages have been a growing problem for years, even with a plentiful supply of EU workers, but now the situation is becoming critical.
"Hard-pressed businesses are struggling, and in many cases failing, to recruit people from wherever they can get them – locally, from the rest of the UK, or overseas – and four in 10 have increased pay rates in a bid to improve recruitment and retention.
"Sadly, however, staffing shortages in tourism and hospitality are a national and international problem rather than something purely local, and solving the problem in the Highlands and Islands is going to be far from easy.
“It is the longer-term damage caused by these staff shortages that is so worrying. The Highlands and Islands is renowned for its world-class scenery, natural and cultural heritage and activities – but being a world-class holiday destination means providing world-class service and outstanding value for money too.
"Poor customer service because staff are overstretched, or no service at all because businesses are closing early or cutting back on what they provide, doesn’t just impact on visitor satisfaction and spend now – it impacts on the propensity of these visitors to return and recommend the northern Highlands to others. The resulting damage can affect us all.
“We must make it as easy as possible for businesses to take on staff, including much-needed migrant workers from overseas, and we must solve the accommodation issue, with a mixture of affordable housing for residents and rooms for seasonal staff. We are encouraging the idea of shared accommodation blocks in key settlements akin to university halls of residence.”
The full report can be found here.
