Hotel jobs lost as oil downturn starts to bite

Scores of hospitality workers have been laid off in the North Mainland amid uncertainty in the oil and gas industry.

The St Magnus Bay Hotel, Busta House and Valleyfield Guest House have all had to reduce staff, with north accommodation owners claiming more oil and gas workers are going to the accommodation block at Sella Ness instead.

Busta House said this time last year it would have employed about 16 or 17 members of staff but is now down to eight.

Manager Joel D’eathe said there had been a difference following the downturn in oil but “the Sella Ness camp has taken a lot from this end of the island”.

“BP are now using the camp at Sella Ness and that’s affecting us, and I believe everyone, more.”

BP last year announced it would not be proceeding with plans for a £500 million gas sweetening plant in the isles, which would have employed about 500 people during its construction. It said there was another cost effective way of meeting gas sweetening needs, given the business climate.

Since the completion of Total’s Shetland Gas Plant, the number of workers needing accommodation has fallen away.

In March service provision firm Shetland FM won a contract from BP to provide accommodation for rotational workers, shift staff and some contractors.

Under the deal the company agreed to provide dinner, bed and breakfast for BP staff and contractors.

And despite the decision to pull the gas sweetening plant, Shetland FM said it would not impact on the deal.

An extension was granted by Shetland Islands Council meaning that accommodation blocks could remain at the site until 2020.

However, some accommodation owners said they were under the impression that when the extension was granted it would be to house gas plant or future gas sweetening plant workers.

Mr D’eathe said Busta tended to accommodate people who were in supervisor roles and there had been a marked decline in bookings “it’s probably reduced in the region of 70-75 per cent,” he said. That he felt, was largely attributable to workers going to Sella Ness.

“There was no consultation about extending the planning permission [for Sella Ness] or there was no point to put our point across,” he said.

He added: “I think it’s a cost saving exercise and I can only hope it’s working. I think having everyone there will save on transport, for example.”

SIC councillor Andrea Manson, director of the St Magnus Bay Hotel in Hillswick and Greystones guesthouse, Brae, said she had already had to lay off staff and expected there would have to be more redundancies in future.

The downturn in demand could also impact on tourism, she said, because accommodation owners may not be able to stay open.

Turnover had probably halved since the completion of the gas plant, she added.

“We employ 15 people at Greystones and at St Magnus but we will probably end up with probably half of that.

“We’re extremely worried about the future, we’ve got hardly anybody. We’ve got two days of Up-Helly-A’ and 16 rooms booked.

“We have a fifth of our rooms occupied whereas this time last year we had 85 per cent occupancy, this year we have 20 per cent.

“Greystones last year we had 70 per cent occupancy and we have eight per cent occupancy.”

Ms Manson, the council’s planning committee vice-chairwoman, added: “Everyone’s accounts are going to show a serious downturn both in receipts and profits this year because of the Sella Ness accommodation camp.”

She believed the council were too generous in the conditions attached to the extension and it should have been extended for gas plant workers and gas sweetening plant workers only.

Terry Moat, of the Valleyfield Guest House in Brae, also has other accommodation, including chalets and totalling just short of 40 beds.

He said he paid off 10 members of staff at the end of last year and workers had gone from the Brae area and Lerwick to stay at Sella Ness.

Mr Moat said he had never had an accommodation contract for oil workers, though over the last 25 to 30 years it had been “fairly steady” with workers maintaining Sullom Voe.

This week he said they had only one man staying with them.

“It’s a bit of uncertainty. I really feel for the staff than anything else.”

Shetland FM executive chairman Frank Strang said the number of workers staying at Sella Ness was less than half of what it was last year.

“All our business is contracted through BP, Total or their sub-contractors,” Mr Strang explained.

“We are not actively going out to steal business from other hotels either with the Shetland FM hat on or the Saxa Vord hat on,” he stressed.

“This time last year there was probably 3,500 people on Laggan-Tormore. We had 800 at Sella Ness. Today we have 241.

“What has happened is the business has fallen over a cliff, and in my opinion, the people who have lost business are trying to find someone to blame and there’s no-one to blame,” Mr Strang said.

Total and BP’s rationale, he said, was that at Sella Ness “we’re only a few minutes away from the site”.

Like other businesses in the area, Sella Ness had had to cut staff, he said.

“We’ve gone from 253 to 97 with redundancies and lay-offs,” said Mr Strang.

Just before Christmas Sella Ness was down to 130 guests and 27 workers were let go just before Christmas.

“I think there will be a slight upturn into the back end of the year and there will be movement over the next 12-18 months,” said Mr Strang.

North mainland councillor Alastair Cooper attended a meeting with BP on Wednesday and was hopeful of more workers returning to the isles.

“We had a meeting with BP and they are saying they are going to be manning up again [at Sullom Voe] for the summer work,” said Mr Cooper.

“BP took a lot of the folk out of the hotels around Brae and Hillswick.”

Throughout this year he thought there would be “more of a plateau” of regular work than the “boom” of previous years.