The term ‘perfect storm’ might arguably have been overused since the Covid-19 pandemic and in the face of all the other pressures to have hit businesses in recent years.
But I think it really is an accurate reflection of the current challenges facing our sector.
Take, for example, the case of our chairman, Glen Evans. Glen’s business is one of Conwy’s largest employers, and at a recent conference he shared a stark scenario that resonated across the industry.
Glen’s two large hotels in Betws-y-Coed are emblematic of the broader issues confronting the tourism industry in North Wales.
In October 2022, Glen saw a staggering £450,000 increase in his energy costs. This kind of price surge is unsustainable for any business, let alone those in the hospitality sector, which was hit hardest during the lockdowns. Compounding this issue is wage inflation, which has been running between 15 to 20% due to a significant skills shortage. Despite a headcount of 172 staff pre-pandemic, Glen now operates with around 145, struggling to fill the remaining positions.
Food inflation and insurance costs have also soared by 15%, and supply chain disruptions have caused months-long delays in repairs and maintenance. This has led to heavy discounting during the reduced off-season winter demand, further eroding profitability.
These financial strains are exacerbated by a raft of policies introduced by the Welsh Government, which seem counter-productive. The 182-day threshold for furnished holiday lets is a prime example. Intended to make more housing available, this policy fails to recognise that these properties are businesses, not second homes. The result is that many operators are unable to meet the threshold, subjecting them to hefty council tax premiums and threatening their viability.
The proposed tourism levy, planning changes under Article 4, and reduced business rates relief in Wales compared to England (40% versus 70%) add further burdens. Road and waste regulations also create additional costs and logistical challenges. These measures are hitting an industry already struggling to recover from the pandemic.
These issues are not isolated to Betws-y-Coed but are rampant across all areas of Wales.
Businesses are grappling with soaring costs, regulatory pressures, and a decline in winter demand, leading to heavy discounting and reduced profitability. This situation is untenable for many, potentially leading to business closures and job losses, which would be devastating for our local communities.
Before the Covid-19 pandemic, we had a productive relationship with the Welsh Government and Visit Wales. We benefited from significant marketing support, which helped promote North Wales as a dynamic tourism destination. However, the recent spate of policies from the Welsh Government threatens to undo this progress. Instead of fostering recovery, these regulations are stifling growth and innovation in our sector.
We need a return to a collaborative approach, where the public and private sectors work together to support the tourism industry. This includes reconsidering policies that hinder rather than help and providing tangible support to help businesses manage rising costs and navigate post-pandemic recovery.
