Business rates shock for island hotels

The hospitality industry was already facing significant challenges before the hike in business rates.

Island hospitality businesses driven to the edge by the ferries crisis face another body blow with huge increases in business rate valuations. There were warnings this week it would be “the straw that breaks the camel’s back” for some.

Hoteliers throughout the islands are seeking to challenge valuations which, they say, bear no relationship to profitability or turnover and take no account of blows inflicted by ferry cancellations and high energy costs.

The business rate increases are in contrast to the Scottish Government’s refusal so far to set up a compensation scheme for businesses worst affected by the ferry chaos and this has led to renewed calls for such a fund to be created.

Business rates are paid into a centralised Scottish pool distributed by the Scottish Government and are not set by the local authority. The amount paid by each business depends on rateable valuations.

Shonnie Macritchie, owner of Stornoway’s County Hotel, said he is facing an extra £800 a month in business rates. He asked: “On top of everything else, did they really have to impose this on struggling businesses? We are working with others to see if there is a way of appealing”.

In South Uist, which has seen its economy devastated by ferry disruption, Calum Macaulay of Lochboisdale Hotel, said his valuation has increased by 15 per cent. “It is just another money-making scam,” he said. “We are appealing, as a seasonal business that has been crippled by the ferry scandal”.

Angie John Macleod of Hotel Hebrides in Tarbert has seen his valuation jump by 22 per cent. He questioned why it was “specifically hospitality businesses that are being hit again and again, in comparison to other sectors”. He said: “A lot of other small businesses get more or less 100 per cent relief but for hospitality, it just keeps piling on”.

The owner of Cala Hotels in Stornoway, Kenneth Mackenzie, said: "These business rate rises are substantial and are coming in during a particularly challenging time for the Hebridean hospitality industry. Over the past year or so, we have seen unprecedented rises in the cost of food and energy so it's a difficult time for the whole sector.

“We try to absorb as much of these increased costs as we can, but it's inevitable that some of these increases are passed on to our customers in our room rates and menu prices. Hopefully, there will be some Government relief forthcoming to Hebridean businesses in view of the ongoing ferry fiasco.”

The compensation issue was also raised by Calum Macaulay of Lochboisdale Hotel. He told the Gazette: “Nobody could blame the Scottish Government for Glasgow School of Art burning down but within weeks they delivered a £5 million compensation fund for affected businesses.

“The ferry situation is a direct consequence of decisions taken by the Scottish Government yet we are not worth a compensation fund. How can they justify that difference of treatment?”.

He described the busines rates increase as “another body blow” which contributed to “the worst situation I’ve seen in 20 years”.

David Richardson, the Federation of Small Businesses representative in the Highlands and Islands, said: “The feeling is that retailers have generally done better out of the most recent revaluation than hospitality and some business owners are very worried indeed.

“Hospitality has been hit particularly hard already by the pandemic, staff shortages and escalating costs.”

He said he hoped the “Scottish Government looks more favourably on the plight of tourism and hospitality businesses across the Highlands and Islands in future. So many communities depend on them.”