The chief executive of Crieff Hydro has described the “incredibly tough” process of making redundancies.
The Crieff Hydro hotel group has lost hundreds of staff and taken on a multi-million- pound debt as Covid-19 decimated its revenues.
Chief executive Stephen Leckie said the decision to make job cuts had been a “harsh reality”.
More than 400 workers leave the business
A year ago the group – which has seven hotels Murraypark in Crieff – employed 1,050 staff.
The impact of the pandemic means just over 600 workers remain on the payroll.
Crieff Hydro began redundancy talks with 241 staff in June and at the time Mr Leckie estimated 80 staff would have to go.
“In the end we had to make very few redundancies,” he said.
“A lot of staff found other work. In the end we had to make 60 redundancies, which was very tough.
“Furlough has been a huge help to us on one hand.
“But the national insurance and payroll contributions also cost us a lot of money. The wages costs for furlough presently are £40,000 a month.”
£20m of revenue lost
Mr Leckie, who is president of Perthshire Chamber of Commerce, said the business was losing £25,000 a day while its premises remain closed to the public.
He estimated the loss in revenue over the past year at more than £20 million.
“We had plans this year to take in £100,000 a day every single day to make enough profit to look after our people and to reinvest back into our business,” he said.
“We’ve gone from £100,000 in revenue every day to nothing.
“But it’s worse than that. We’ve had to borrow money to stay closed, which goes against every bit of business acumen I’ve learned. We have an additional £6m of unplanned and unwanted debt.
“While closed we are losing £25,000 a day – more than £1,000 every hour.
“Like tourism businesses across the country we’ve been devastated by the pandemic.”
The group’s financial year runs to the end of this month.
It expects to record revenues of £15.4m instead of a budgeted £35.5m. A loss of around £1.1m is expected instead of a projected profit at the start of the year of £3.7m.
‘We will survive this’
Despite the challenges, Mr Leckie has no doubts Crieff Hydro will survive the Covid-19 crisis.
He said traffic to the group’s websites indicated pent up demand and it was likely additional workers would be hired this year.
“When we can open – which we hope will be March – we know we’ll be busy and need to hit the ground running,” the chief executive said.
“Around 35% of our trade comes from international business, groups, tours, functions, conferences – we probably won’t see that this year.
“The good news is we will survive this with the bank’s support. They like the management of the company and I applaud our leadership team for that.
“We believe in the business – we think we are sturdy and stable.
“It’s the case that for a year we’re going to have to take a massive drop in income and take on debt that will take years to recover.
“But we will get back on our feet and back to trading successfully.”
Successful year of trading in 2019/20
Newly filed accounts for the year ending February 29 2020 show a successful year of trading before the pandemic.
Turnover increased to £32.9 million from £31.2m in 2019. Pre-tax profits were flat at £1.2m.
In November, Taypark House Hotel in Dundee became the first associated hotel of Crieff Hydro, providing marketing and sales support.
The group has invested £500,000 to increase its distillery’s capacity as it expects strong demand for its gin brand 1881.
Long history of magnificent Perthshire resort
Crieff Hydro was established as a hydropathic spa in 1868.
Today the 215 bedroom hotel boasts more than 60 on-site activities and seven restaurants, cafes and bars. There are also 55 self-catering lodges and free childcare is available.
Crieff Hydro Family of Hotels also includes Peebles Hydro, Murraypark Hotel in Crieff, The Park Hotel in Peebles, The Isles of Glencoe, Ballachulish Hotel and Kingshouse Hotel also in Glencoe.
Stephen Leckie is the fifth generation in his family to operate Crieff Hydro.
He is chairman of the Scottish Tourism Alliance and is President of the Perthshire Chamber of Commerce.
Since 2019 Stephen has represented her Majesty the Queen, as Lord-Lieutenant for Perth & Kinross.