One in three tourism and hospitality businesses say they are likely to fail in 2022, according to the Scottish Tourism Alliance (STA).
The industry body surveyed 1,335 businesses across Scotland’s 31 regions during December and January, with just over half stating that they had either zero or just one to two months of cash reserves to stay afloat.
A further 68% of respondents stated they were in financial difficulty, citing extreme concern over increased costs, particularly in relation to utilities, reduced revenue or a combination of both as contributory factors, while 52% said they had been impacted by staff shortages over the survey period – the majority being in the hospitality sector.
In terms of support needed to make a difference to business recovery, sector specific grants were seen as being of the most value across all sectors, particularly within the coach and tour operator category, many of whom have had little to no business over the past 20 months.
Retaining the 12.5% rate of VAT was also viewed as a priority action for recovery, predominantly within the food and drink and hospitality sectors. The removal of Covid-19 restrictions was stated as likely to make a key difference to all sectors in the tourism industry.
The most robust tourism sub-sectors were accommodation, followed by food and drink, attractions, arts and theatre, and then tour and coach operators.
The background request to seek evidence was initiated by the Department of Culture, Media and Sport (DCMS) at a UK Tourism Industry Council meeting, which the STA has attended throughout the pandemic.
The survey results were presented to Economy Secretary Kate Forbes on 11 January at the STA Member Council meeting and will feed into the activity of the Scottish Tourism Emergency Group.
STA chief executive Marc Crothall said that the number of responses to the survey shows just how anxious tourism businesses are to communicate their financial pain and commercial instability.
“What our survey highlights is a much greater opportunity and 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.
“We need to see a commitment to supporting a robust marketing campaign to stimulate the international market which our visitor economy, particularly city destinations are so reliant on.”
He explained that the window of opportunity from an international perspective will close in March – the next few weeks are therefore critical for securing international bookings and a relatively buoyant summer season.
While Crothall welcomed the Scottish Government’s announcement of £9m of tourism-specific support, he argued that for the vast majority of businesses, “this won’t touch the sides of what is evidently a gaping chasm between business failure and any sense of stability”.
He concluded: “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.”
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