Tourism industry buckling under intense pressure from government policies

01/03/2023

“The stark reality facing our industry is that the survival of many businesses will be entirely dependent on an immediate change in the direction of government policy.” – Marc Crothall, CEO Scottish Tourism Alliance

The Scottish Tourism Alliance (STA), the acknowledged overarching trade body and voice for Scotland’s tourism and hospitality industry, has today, the first day of Scottish Tourism Month published results of its Business Barometer Survey.

KEY FINDINGS

  • 60% of respondents had less than 3 months cash reserves, with just under a quarter having none.
  • Across all businesses, the standout challenges were energy costs (93%) and the cost of living (84%)
  • For tourism and hospitality businesses the Short Term Lets (STLs) Licensing Scheme (35%) and energy costs (25%) were the top challenges facing tourism and hospitality businesses.
  • Government policy wise, the priority call from businesses was to pause impending regulation; this would help at least 23%. Also, nearly half of respondents are facing an increase in their business rateable values (45%), with 5% experiencing over 75% increase and 9% facing a 50% increase.
  • 83% of respondents ranked STLs as a challenge; the Deposit Return Scheme (DRS) was seen to be a challenge by 58% of those who took part in the survey. A significant number of respondents also called for action on Business Rates, with rates relief to be aligned with England.
  • Respondents continue to call for the UK Government to improve immigration measures; lower VAT for the sector; bring down inflation; lower corporation taxes and business rates; and ensure better distribution of levelling-up funding.
  • 96% of respondents are ‘not confident’, ‘pessimistic’ or ‘extremely pessimistic’ that the UK Government’s new Energy Bills Discount Scheme will protect the tourism and hospitality industry from energy prices over the next 12 months. 28% reported that they were ‘extremely pessimistic’ about energy bill protection beyond April 2023.

Commenting on the results the CEO of the Scottish Tourism Alliance Marc Crothall said:

“The intensity of feeling across the industry is tangible. This is a resilient sector that continues to strive for success.The stark reality facing our industry is that the survival of many businesses will be entirely dependent on an immediate change in the direction of government policy.”

“Everyone across the country is facing intense pressures from inflation and energy costs and business is no different. Our industry is experiencing the double whammy from inflation and the policy pain that is adding costs which could put many out of business altogether. This is entirely the wrong time for the Scottish Government to be piloting policies that will do limited good and risk maximum harm. At the same time, the withdrawal of financial support measures and a return to heavy taxation burdens will be a heavy burden to bear for too many.”

SURVEY BACKGROUND:

  • The Business Barometer and Energy Survey took place between 3rd and 19th February 2023. Overall, there were 714 survey respondents.
  • The survey represents views from 31 out of the 32 local authorities across Scotland. 31% of responses came from the Highland Council area.

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