WARNINGS have been given that a 7.5% rise in VAT along with the current 57,000 vacancies in the hospitality industry will lead to hotel closures across Scotland.

The Scottish Tourism Association (STA) has now written to Secretary of State for Scotland Alister Jack, to highlight the “gravity of the crisis” and the need for “urgent” solutions as the industry remains in “survival mode”, rather than moving to ­recovery.

The STA’s call for help comes as the UK Government increased VAT from its temporary pandemic level of 5% to 12.5% from the start of this month. Industry reports indicate that the scale of the problems affecting the sector could lead to 10% of Scotland’s hotels being forced to shut permanently by 2023, leading to a serious impact on both urban and rural economies.

Recent casualties include the Glenburn Hotel on Bute, Scotland’s first hydropathic hotel which opened in 1892.

The National: The 121-bed Bay Glenburn Hotel in Rothesa

Staff shortages, which have been blamed on Brexit and the coronavirus pandemic, have led to venues cutting opening hours amid growing fears that many will have to close for good.

Nicholas Russell, company managing director at Balbirnie House Hotel in Fife, said even more difficulties were now facing the industry and expressed concern that establishments in more remote areas could close.

Being close to towns like Glenrothes and Markinch means Balbirnie can draw on a local workforce. But while it has not suffered the same staffing issues as hotels in more remote areas, Russell said they were “profoundly saddened” to lose EU members of the team following Brexit.

“Before Brexit about 20% of our team were from EU countries and our EU members brought personality, great happiness, diversity and culture and we are profoundly saddened to have lost that all that,” he said.

He said it had been a “real battle” to surmount the challenges posed by Brexit and the pandemic but support from the local community and dedicated staff had helped Balbirnie overcome them.

However he added: “Our thoughts are very much with industry colleagues in remote destination properties who are having such extreme difficulties.”

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Russell said difficulties ahead included the UK Government’s intention to restore the 20% VAT rate which was cut to 5% during the pandemic. There are calls for it to remain at 5% in line with many other EU countries.

The supply chain issues and rocketing price rises are also compounding problems in the hospitality sector.

Balbirnie’s suppliers have asked the hotel to place orders three weeks before they are needed and Russell said some of the price rises were “extraordinary” with prime cuts of beef going up in price by 20% in the last few months.

He said it would help if Scotland were able to introduce a one year visa scheme, or something similar, allowing people to come from the EU to help out.

“That is not Scotland’s decision to make and similarly with VAT – MPs were told point-blank it wasn’t happening. Scotland’s hands are tied but we are not talking about missing a few thousand people; it is tens of thousands,” he said.

The STA is to meet with Scotland Office minister Iain Stewart on Thursday to push for help for the industry. An STA spokesperson said their letter to Jack had been forwarded to him.

STA chief executive Marc Crothall said: “Scotland will host the globally important COP26 event in November with the world’s spotlight shining again on our country, people and assets; it seems unthinkable for our country to be in a position where we cannot staff our hospitality and tourism businesses to deliver what in many cases falls well below the line in terms of a basic service.

“They’re also dealing with increased costs, repayments on loans which were taken out during the peak of the crisis, VAT repayments, the increased costs of recruitment, juggling moving staff rotas, extra administration, managing customer adherence to additional regulation brought on by Covid and increased costs of utilities that both Covid and Brexit has brought home to roost.”

He said a similar visa to the one now being extended to HGV drivers was needed for the hospitality sector but for a longer period.

The UK Government has been approached for comment.