Third of tourism and hospitality businesses could fail

Survey finds 76% of food and drink businesses have either low or no cash reserves left


THE Scottish Tourism Alliance (STA) has warned that as many as one in three Scottish tourism and hospitality businesses could fail this year if the sector doesn’t receive greater support from government.

The warning comes after an STA survey of 1335 businesses across Scotland, which was conducted between 17th December and 10th January.

It found that around one in three businesses – 36% – believed their business was likely to fail this year. Among food and drink businesses – including pubs, bars, cafés and restaurants – this figure was higher, with 46% believing they were likely to fail.

Just over half of respondents (53%) said they had either no cash reserves or between one and two months of cash reserves left. This figure rose dramatically among food and drink respondents, with 76% of businesses saying they had either no reserves or enough for just one or two months.

Fewer than 10% of respondents to the survey said they had enough cash reserves for a year or more.

Sector-specific grants and the removal of COVID-related trading restrictions were cited as the top two government measures that could aid business recovery.

The survey was initiated after the Department of Culture, Media and Sport requested evidence, with the findings also passed to Scottish finance secretary Kate Forbes.

STA chief executive, Marc Crothall, said the survey reinforced 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”.

“All businesses across every part of the sector in Scotland are experiencing a rapid increase in costs combined with significant financial losses,” said Crothall.

“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.”