One third of tourism and hospitality businesses in Scotland predict failure in 2022

Some 1,335 businesses across Scotland’s 31 regions took part in the survey, which ran from 17 December 2021 to 10 January 2022, with just over half of all respondents stating that they had either zero or just one to two months of cash reserves to stay afloat.

Just over two thirds (68%) of respondents stated they were in financial difficulty, citing extreme concern over increased costs, particularly in relation to utilities, reduced revenue or a combination of both as contributory factors; and 52% said they had been impacted by staff shortages over the survey period, the majority being in the hospitality sector.

In terms of support needed to make a difference to business recovery, sector specific grants were seen as being of the most value across all sectors, particularly within the coach and tour operator category, many of whom have had little or zero business over the past 20 months; and food and drink, which includes hospitality businesses.

Retaining the 12.5% rate of VAT was also viewed as a priority action for recovery, predominantly within the food and drink and hospitality sectors; and the removal of restrictions was stated as likely to make a key difference to all sectors in the tourism industry.

Earlier this week it was announced that hospitality businesses in Scotland will continue to face tight restrictions on indoor trading for at least another week​​, with the sector accusing the Scottish Government of leaving it 'in limbo'.

It had been hoped that measures requiring licensed hospitality venues to operate table service only and all indoor hospitality settings to ensure there is a one metre distance between groups of people who are attending together would be lifted next Monday 17 January, three weeks after they came into force.

On Tuesday (11 January) though, First Minister Nicola Sturgeon announced that the restrictions, which have also forced nightclubs in the country to close, would now last until at least 24 January.

"What our survey highlights is a much greater opportunity and the need for governments to leverage supportive policy around areas such as business rates, the retention of the current rate of VAT beyond March and remove potential barriers which are recognised as being significantly detrimental to business survival and recovery," says Marc Crothall, STA chief executive.

"We need to see a commitment to supporting a robust marketing campaign to stimulate the international market which our visitor economy, particularly city destinations are so reliant on.

"The window of opportunity from an international perspective will close in March; the next few weeks are therefore critical for securing international bookings and the hope of a relatively buoyant summer season.  Positive messaging in relation to safety around travel to and within Scotland will also be essential to restore public confidence.

"All businesses across every part of the sector in Scotland are experiencing a rapid increase in costs combined with significant financial losses; there has never been a greater need for the sector to trade unencumbered, without additional costs since financial support will never fully restore businesses to a more even keel in terms of viability and the ability to remain competitive.”

The background request to seek evidence was initiated by the Department of Culture, Media and Sport (DCMS) at a UK Tourism Industry Council meeting, which the STA has attended throughout the pandemic and the survey shared by tourism counterparts across the UK nations. The survey results were presented to Economy Secretary Kate Forbes on Tuesday 11 January at the STA Member Council meeting and will feed into the activity of the Scottish Tourism Emergency Group (STERG).