More than a quarter of tourism businesses in south of Scotland contemplating permanent closure as operating costs skyrocket

Melanie Allen (SSDA)

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THE results of an in-depth ‘barometer survey’ of tourism and hospitality businesses in the South of Scotland paint a concerning picture of the difficulties many operators face in a worsening national and global economic climate, with one describing the cost of living crisis as ‘much, much bigger than Covid as a risk to business survival and growth’.

Published today, the findings of research carried out by the South of Scotland Destination Alliance (SSDA) are a mixed bag, showing that while a majority (over 70%) are neutral or optimistic about their trading and turnover prospects in the coming year to two years, there is currently widespread and growing concern among many tourism and hospitality businesses in the region, who face increasing challenges to ‘keep the lights on’ as costs and inflation soar and consumer confidence dips.  

The vast majority of self-caterers and B&Bs expressed serious concerns about the impact of forthcoming short-term let licence requirements on their business, with two thirds of self-caterers in favour of the legislation being paused.

Stand-out statistics emerging from the barometer survey, which captured responses to over two dozen questions about their current and forthcoming operating challenges as well as ongoing plans and priorities, include:

  • More than a quarter (27%) of businesses say they may have to close permanently due to the current climate, including 50% of B&Bs
  • Rising energy, fuel and insurance costs are having the biggest impact on businesses, along with falling consumer confidence and below pre-Covid visitor numbers, both domestic and international
  • Over 50% of the respondents feel neutral or pessimistic about their businesses performance for the next 3 – 6 months, however more than two thirds (70%+) report feeling neutral or optimistic regarding the next 12 – 24 months
  • 85% of B&Bs say STL licensing will have a high impact on their business
  • 65% of self-caterers say putting a hold on STL Licensing legislation would be highly significant to their business
  • Businesses cite concerns about rates and VAT returning to normal levels despite them still being in ‘recovery mode’; those surveyed stated a freeze or reduction on those would have the biggest impact on their business
  • Feedback from those operating at lower capacity indicated staffing shortages and thecost of living crisis as reasons for lower trade
  • overwhelming priorities for the next 3-6 months are monitoring cashflow (78%), reducing overheads (68%) alongside a priority to focus on marketing (69%), actively working to become more sustainable (64%) and collaborations (63%)

Comments submitted in response to the barometer survey included:

“The current cost of living crisis feels much, much bigger than Covid as a risk to business survival and growth. This is compounded by the fear of how much it may spiral and just so many unknowns about what’s to come. Staff are exhausted. We haven’t had a normal year in a very long time so it’s very difficult to have any kind of plan!”

Meanwhile, others expressed concern that the tourism and hospitality offer in the south of Scotland is shrinking due to twin challenges of mounting costs and short term let licensing legislation, with businesses already closing permanently. 

Responding to the survey results, the SSDA’s Interim Chief Executive Melanie Allen emphasised that the tourism body will continue to do everything in its power to support its members and the wider south of Scotland visitor economy, using the “invaluable” insight provided by the survey responses to shape its immediate and medium-term priorities and activities.  

Melanie Allen said: 

“This survey has given us invaluable insight into the current state of play with local tourism and hospitality businesses in the south of Scotland and we’re hugely grateful to everyone who took the time to send us their feedback. While the overall results are a bit of a mixed bag, it’s quite stark to note that a really significant proportion of regional businesses fear they may have to shut their doors for good given the exceptionally challenging economic climate we’re in just now. 

“As an organisation, the SSDA is committed to supporting all our members across the south of Scotland, and we will be continually looking at ways our support will make the most impact for businesses.  Over the past year it has been rewarding to see audiences of our regional brand Scotland Starts Here grow exponentially, with this greater profile we hope to see tourism and hospitality businesses benefit from increased exposure to both domestic and international visitors.

“Over the next few months we will be engaging with businesses on marketing campaigns, tourism industry insights, webinars and workshops as additional support. We see our primary role as a facilitator of cross-industry collaboration and sharing best practice, as well as championing our members’ needs and priorities at national and UK level.

“The results show that there are significant positive opportunities to work on in terms of marketing and sustainable, collaborative working – it’s inspiring to see so many businesses genuinely intent on finding ways to make their business current, and we stand ready to do whatever we can to help.

“I will shortly be writing to MSPs on behalf of the SSDA, setting out the immediate and medium-term priorities and needs of the tourism and hospitality sectors in the south of Scotland, to inform their budget-setting and decision-making into 2023. 

“And over the coming weeks and months, we’ll be rolling out campaigns focusing on the appeal of the south of Scotland for wonderful, cosy winter breaks with exceptional food and drink, as well as promoting it as an unrivalled Dark Skies destination. Meanwhile plans are moving along at pace for our second annual conference, which will take place early in 2023.”

Marc Crothall, Chief Executive of the Scottish Tourism Alliance (STA), said: 

“Scotland’s tourism industry is currently facing a multitude of challenges, from the decline in consumer spending due to the cost-of-living crisis and rise in inflation to the significant costs of merely keeping businesses open in significantly challenging times.  

“The ‘golden quarter’ of trading which is between now and the end of the year should be delivering buoyant results and high levels of business confidence, however businesses across the sector are feeling the acute impact of the current economic challenges and are simply unable to deliver the service they would wish to.  Many are closing or part closing, as the survey indicates.  

“The Scottish Tourism Alliance will continue to steer the industry through this exceptionally difficult chapter and I know the economic landscape will be the focus of many conversations with the 20+ MSPs who are attending the Tourism Industry Conference evening reception at the EICC on 9th November.”

The SSDA plans to roll out another barometer survey in the New Year to take the temperature of the industry during the difficult winter period. Two full barometer surveys of South of Scotland tourism and hospitality businesses will be carried out each year, providing invaluable insights and data to inform policymakers, organisations and business leaders right across the region. 

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