Scottish tourism and hospitality businesses on a “financial knife-edge”, according to report 

SCOTTISH tourism and hospitality businesses are “on a financial knife-edge”, according to a report published this week. 

Over 300 businesses were surveyed in October by the Scottish Tourism Alliance (STA) and research company 56 Degree Insight, with the full report released yesterday, just days before the release of the Scottish Budget next week. 

The results show that many businesses in the country are struggling to make profits, and are battling rising energy costs, a decrease in domestic visitors, and tax pressures. 

Shockingly, of those surveyed, 85% said they have little to no trust in the Scottish Government to deliver funding for the tourism and hospitality sector over the next 12 months. 

The survey was conducted throughout October and makes clear the needs of the Scottish tourism and hospitality sector ahead of the budget release. 

When asked about how the government could create the best environment for business, almost half of respondents were said to want “greater recognition of tourism as an economic driver”. 

A third want the Short Terms Lets (STLs) Licensing Scheme to be reviewed, and 34% want the government to reduce the regulatory burden on running a business.  

The STLs scheme was introduced into the City of Edinburgh in 2022, though it has recently been revealed that almost 90% of STL planning applications have been refused by Edinburgh Council since then. 

Despite a “standout” summer for international visitors to Scotland, numbers of domestic visitors continue to drop, as outlined in another survey that shows 43% of Scottish residents are taking fewer breaks in Scotland than in 2023. 

This, combined with the fact that over three quarters of businesses are spending more on energy, supplier expenses, and staff, means that 78% of hospitality operators say they have less than three months’ worth of cash reserves. 

STA Chief Executive Marc Crothall MBE said that business owners “continue to feel overlooked and undervalued by the Scottish Government” and that “many of the sector’s businesses are on a financial knife-edge”. 

He added: “Scotland is starting to get a reputation for being overpriced for the quality of experience offered compared to other competing destinations.  

“With the visitor levy on the horizon in Edinburgh and other parts of Scotland, there is a risk we will reach a tipping point where we are too expensive, even for the high-spending American market. 

“After several challenging years for the sector, behind the scenes we are also seeing an increasing rise of mental health issues amongst business owners in the sector, as they struggle to cope with rising business costs and challenges.” 

The Visitor Levy (Scotland) Bill was passed in May this year, which enables local authorities to apply a levy on overnight stays. 

Crothall states that this places pressure on accommodation providers who “are now faced with having to put in place new systems for collecting a visitor levy on behalf of cash strapped local authorities who elect to introduce the levy”. 

Additionally, business owners were surveyed before the UK Government’s Autumn Budget announcement which, according to the STA, “will have been another financial blow to the sector”.