Key challenges facing the hospitality industry

Hospitality industry stakeholders were asked for their views on the current challenges facing the industry to provide important context around the discussion of fair work. There was a substantial consensus about what those challenges are. The most pressing challenge related to rising operating costs, specifically energy, supplier and labour costs, and their negative impact on profit margins and business viability.

For some industry stakeholders, and particularly in remote or rural businesses, ongoing difficulties were identified in relation to housing availability for staff, and transport infrastructure for both staff and customers. Hospitality businesses operating in the islands were facing significant issues arising from the operation of ferry services.

Stakeholders identified staff attraction and retention as ongoing concerns Scotland-wide but most acutely in remote or rural businesses. They recognised that the industry has something of an image problem in attracting staff. In part, they believed this related to legacy issues, where poor employment practices and management behaviours in the past had damaged the industry’s reputation, but many argued that these approaches were diminishing – though still present in parts of the industry. Some stakeholders also believed that the industry was seen as low status time-limited work that staff did “while waiting for a proper job”. Difficulties in attracting and retaining staff were viewed as costly, particularly for small businesses where sunk training costs were felt disproportionately.

Other internal and external factors contributed to staff attraction and retention challenges. Internal factors included business model constraints – for example, patterns of demand for services/products that drove part-time or seasonal employment. External factors identified included the longer-term impact of the Covid19 pandemic restrictions and how these continued to shape patterns of demand and resourcing in some parts of the industry. Notably, for many stakeholders, post-EU exit shifts in access to migrant labour and the difficulties in negotiating the UK visa system reduced the pool from which hospitality businesses often recruited. Internal and external factors can interact to exacerbate attraction and retention difficulties: for example, a lack of affordable local housing either reduced the pool of labour available or increased wage pressures.