Positives remain among hospitality challenges in Caithness and Sutherland
Trudy Morris, chief executive of Caithness Chamber of Commerce, considers the impact of recent announcements on the businesses that help define the far north
Each year, the north Highlands beckon to those in search of adventure, new experiences, and escapism. Our region boasts a rich, diverse culture, defined by dramatic coastlines, untamed landscapes, sweeping panoramas, and abundant wildlife.
Renowned for our deep-rooted history and famed “Highland hospitality”, it’s not difficult to see why the north Highlands is a popular tourist destination.
With around 792,000 visitors annually, tourism in the area has a significant economic impact, supporting over 3000 jobs and contributing £194.94 million to the local economy.
In October, I was pleased to join peers and colleagues from across the wider Highland region for a roundtable discussion hosted by the Royal Bank of Scotland. The session gathered businesses and industry stakeholders to share reflections on the 2024 season and discuss opportunities and challenges facing the industry.
A primary concern raised was the anticipated visitor levy in the Highlands, which many fear could reduce spending per visitor. Concerns were also voiced about rising costs affecting both businesses and consumers, potentially rendering the Highlands an expensive destination and threatening the viability of some operators.
Economic outlook surveys indicate consumer spending remains subdued. Although disposable incomes have risen, many are choosing to save rather than spend, reflecting ongoing caution since the pandemic and uncertainty about the future.
The hospitality sector in our region is made up of a rich tapestry of small to medium-sized enterprises (SMEs), which play a pivotal role in shaping the region's unique visitor experience. These businesses – spanning small independent hotels, bed and breakfasts, self-catering cottages, and boutique guesthouses – are often family-owned and deeply embedded in our communities.
It is concerning to read the results of a survey published in October by the Association of Scotland’s Self-Caterers. The survey revealed that over two-thirds of self-catering operators in Scotland (68 per cent) reported experiencing a “negative” or “extremely negative” impact on their mental health and wellbeing due to recent regulatory changes regarding short-term let regulations.
There is a strong sentiment that these regulations have caused financial strain, as well as increased anxiety and uncertainty, highlighting a clear sense of discontent within the sector.
Tourism and hospitality businesses in the north Highlands have indeed faced significant challenges in recent years, including rising costs and the effects of a cooling of a post-Covid boom. The recent Autumn Budget adds further pressures, with tax increases, rising operational costs, and fragile consumer confidence all impacting growth prospects.
Looking to 2025, we anticipate a challenging year and are calling on the Scottish Government to introduce much-needed reforms to business rates, aligning the hard-pressed hospitality sector with the rest of the UK to provide essential relief.
There are, however, new opportunities on the horizon and reasons to be hopeful. A major highlight of the year was the designation of the Flow Country as a World Heritage Site in July.
The 10,000-year-old blanket bog, now recognised alongside sites such as the Serengeti and Great Barrier Reef, will undoubtedly elevate the global profile of Caithness and Sutherland, fostering international collaborations and potential economic growth while safeguarding our unique natural heritage.
Scrabster Harbour reported a successful year, welcoming 13 cruise ships, including the 71,304-tonne AIDAsol, which is the largest vessel to ever dock at the port. It was wonderful to see the excitement in Thurso town centre as local businesses and volunteers went above and beyond to welcome travellers. It is clear the north Highlands has much to offer to visitors.
The businesses in our region deserve recognition for their resilience as they adapt to the challenges of a constantly changing industry. Moving forward, Caithness Chamber and Venture North are dedicated to supporting our members in navigating an increasingly complex economic environment.
People are at the heart of hospitality businesses
View from the Board by Andrew Mackay
In rural areas such as the north Highlands, where communities can be fragile and employment opportunities limited, the hospitality industry plays a crucial role in retaining local talent and reducing out-migration.
It offers a wide range of jobs, from entry-level to managerial roles, with flexible hours that suit individuals such as parents, older workers, and students who need to balance other commitments.
However, changes to employer National Insurance Contributions (NICs) set out in the Autumn Budget will have a disproportionate impact on the hospitality sector, creating significant challenges. The newly lowered threshold will bring thousands of part-time staff into Employer NICs for the first time.
According to UK Hospitality, the sector’s trade body, this change could cost the industry up to four times more than the new headline rate. Sadly, these changes put an undue burden on hospitality businesses, which are vital for providing local employment, while favouring businesses that have reduced their workforce through automation or use of technology.
These changes to NICs are simply unsustainable for our businesses. With no ability to pass these costs onto customers, the burden will fall directly on us. The government must urgently consider measures to protect businesses that rely on employing large, diverse workforces.
The human element is what sets hospitality apart. Our teams are essential for understanding and meeting the needs of our guests, building relationships, and creating memorable experiences. From weddings and graduations to birthdays and funerals, we are entrusted with some of the most significant moments in our customers’ lives – a responsibility our team takes seriously.
Hospitality businesses in the north Highlands are at the heart of our local communities.
• Andrew Mackay is the proprietor of The Caithness Collection.
