Audit Scotland probe gives in-sight into failed tenure at Cairngorm Mountain
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The payments kept coming for NAIL even as Cairngorm Mountain was failing and racking up big debts, the Audit Scotland report reveals.
This was because at the start of the contract, the company negotiated with Highlands and Islands Enterprise that its subsidiary Cairngorm Mountain Ltd would pay an annual management fee to Natural Retreats although this was not included in any of the legal agreements.
The report published today said HIE considered an operator’s management fee to be standard practice in the leisure industry.
The public agency took external advice and carried out a benchmarking exercise before agreeing the rate for the management fee which was set at 13.5 per cent of annual turnover.
Natural Retreats’ management fees represented 12.9 per cent of CML’s turnover in the period between June 2014 and December 2017.
The report also said that HIE was aware that CML’s relationship with the local community had become increasingly strained as time went on under Natural Retreat's stewardship.
The Audit Scotland findings point out: "It engaged with CML and NAIL to encourage attempts to improve the relationship.
"HIE told us that NAIL’s directors had become reluctant to engage with the community due to a high volume of negative feedback.
"Their focus was on their mandate to deliver CML’s commercial objectives."
The report also states that CML’s directors were "growing increasingly frustrated with the length of time it was taking to get planning permission for the artificial ski slope and the negative impact this was having on its ability to generate additional revenue".
It should also be said that Natural Retreats was hampered by two poor winters during their time at the helm.
By the summer of 2018, HIE was becoming increasingly concerned about the resort operator's overall position including continuing losses since taking over in June 2014.
The report continues: "CML’s balance sheet had moved from a position of having net assets of £0.5 million as at end March 2015 to net liabilities of £2.1 million as at end December 2017.
"Much of this change was due to an increase in the amounts payable to its parent company, NAIL, which rose from £0.3 million as at end March 2015 to £1.9 million as at end December 2017."
Scottish Greens Highlands and Islands MSP John Finnie welcomed the report and said Cairngorm Mountain should be operated in the public interest given its importance to the strath and wider Highlands.
He said: “This complex is vital to the local economy. It is therefore essential that the Scottish Government and HIE ensure that Badenoch and Strathspey communities play a pivotal role in its future.
“The long-term impact of this closure, combined with the impact of the current Covid-19 crisis, has left the local area extremely fragile and it is vital that in re-establishing operations at the mountain, the wider economic impact isn’t overlooked.
“The Auditor General’s report highlights how HIE could have been better placed to react to the Cairngorm crisis if it had reviewed the private operator’s finances on an ongoing basis.
"This is the second time in a decade that HIE had to step in to save the resort after third party operators ran into difficulty.
"It is my view that an amenity of such high importance to the area should be operated in the public interest, whether that be directly by HIE or potentially by the community itself.
“Regardless of the specific operating model it’s clear that HIE will require to be far more engaged in an ongoing basis.
Highlands and Islands Labour MSP, Rhoda Grant welcomed the report and said it was now time to move on.
She said: "The focus now should be on how we can go forward with plans for Cairngorm Mountain with only six months until the next winter ski seasons starts again.
“In my previous meetings with Aviemore and Glenmore Community Trust directors, there were two main concerns – the lack of a community project to aid the survival of winter sports but also the slow progress by HIE and Cairngorm Mountain Scotland Ltd (their subsidiary) in reaching any decisions.
“In the light of Covid-19 and the drastic effect that will have on our economy, there must be a speedy resolution to plans going forward, obviously with the community’s input.
“There is no doubt the funicular opened up the area to thousands of people who would otherwise not have been able to enjoy our beautiful country and I hope the Scottish Government will see that its repair will give a solid base for job protection and creation, helping the survival of the local economy.”
Highlands and Islands MSP Edward Mountain (Scottish Conservative) was damning of HIE's running of Cairngorm Mountain.
He said: “As the Auditor General has pointed out, this is the second time HIE have got it badly wrong and it now appears that HIE did not understand their own lease with Cairngorm Mountain Limited.
"I wonder how Fergus Ewing will address the issues raised in the report because there has been incompetence at all levels.”
Mr Ewing, whose remit as Rural Economy and Tourism Secretary includes the country's ski areas, said: "The audit report does recognise the work that HIE have done and their work now in taking forward the masterplan for Cairngorm.
"I think we are all now looking to the future."
The Strathspey MSP continued: "It is essential that we continue with snowsports this winter on Cairngorm and I believe provided all necessary support from agencies is available and forthcoming, the use of snow-making equipment generally on our five outdoor ski resorts should in this and future years come in to its own .
"Secondly, with Covid-19 influencing people's behaviours there may be fewer people flying for skiing in the Alps - and so potentially more skiers from Scotland and also the rest of the UK who may now be ready and willing to give Scotland a try.
"This does I think provide an opportunity for all our ski resorts. We have agreed to work up some plans about how to take this opportunity forward and come up with a marketing strategy to help all."
