A ‘PERFECT storm’ of factors, including business rates rises, political uncertainty, rising costs and falling profitability, is threatening the future of Scotland’s tourism industry, a study by the Scottish Tourism Alliance (STA) has warned.
While almost two thirds (63%) of the near 400 respondents to the four-month long STA survey said they are confident in the future of their business, this confidence was mainly propelled by a boost in tourism from overseas that many attributed to exchange rates – and it varied by sector.
For instance, 81% of self-catering businesses felt ‘very or quite confident’ about the future; while only 41% of pub and restaurant operators felt the same. Overall, less than half (47%) of all respondents said they expect their annual profits to increase in the next three years – with just over a quarter (27%) expecting a decrease and around a quarter (26%) foreseeing profits remaining the same. But this again varied significantly by sector; more than half (55%) of all self-catering business respondents said they expect profits to rise, while half of all pub/restaurant respondents expect profits to fall.
One in six businesses was reported to lack business confidence, with the pub and restaurant sector highlighted as the least confident (35%). Businesses which expressed a lack of confidence were concerned by the uncertainty around Brexit, the possibility of a second Scottish independence referendum, the potential decline of an international workforce, business rates rises and the rising costs of running a business.
When asked about the sustainability and growth of their business, hotel and pub/restaurant respondents highlighted business rates and employment costs as the biggest concerns to their business.
Only 24% of respondents stated plans to grow/expand their business; restricted cash flow due to rising costs and Brexit were said to be the key factors behind this.
Marc Crothall, chief executive of the STA, said the research demonstrated that “despite confidence which many businesses have attributed to the buoyant season we’ve had… sectors within Scotland’s tourism industry are experiencing a number of different challenges”. “There is not one particular cause for concern within tourism businesses, rather it is the ‘perfect storm’ of factors – a term so often used to describe the current situation within our industry which is leading to rising business costs and falling profitability,” said Crothall.
Tourism secretary Fiona Hyslop said: “It is important that now, more than ever, we succeed in making Scotland a destination of first choice.”