One in three tourism and hospitality businesses in Scotland say they are at risk of failing in 2022, according to a survey just released.
Businesses in the Highlands and Islands made up almost a third of respondents to the survey conducted by the Scottish Tourism Alliance.
Local tourism body SkyeConnect called the results “deeply worrying” and said they showed the impact of the measures imposed over the festive period. He also echoed calls from the STA for reduced fares for businesses and other financial aid.
A total of 1,335 businesses across Scotland’s 31 regions took part in the survey which ran from December 17 to January 10.
Just over half of all respondents said they had zero or only 1-2 months of cash reserves left to stay afloat.
Some 68% of respondents said they were struggling financially, citing extreme concern about rising costs, especially energy bills, falling income, or a combination of the two as contributing factors.
Fifty-two percent were affected by staff shortages during the survey period, with the majority in the hospitality sector.
In terms of the support needed to help businesses recover, sector grants were seen as most helpful across all sectors, particularly in the coach and tour operators and catering category, which includes hotel businesses.
Maintaining the 12.5 percent VAT rate was also seen as a priority for the recovery, mainly in the food and beverage and hospitality sectors. Removing the restrictions was said to be likely to make a key difference for all sectors of the tourism industry.
The survey results were presented to Economy Secretary Kate Forbes, MSP for Skye, Lochaber and Badenoch, at the recent STA Members Council meeting and will feed into the activity of the Scottish Response Group tourist emergency.
Marc Crothall, chief executive of STA, Scotland’s umbrella body for tourism businesses, said: ‘The strength in the number of survey responses shows how eager tourism businesses are to communicate the level of deep pain financial and commercial instability that they are. following the recent measures introduced and of course the decline in consumer confidence in line with public health messages.
“The Scottish Government’s emergency financial support has been hugely welcomed by the sector. However, for the vast majority of businesses it will not touch the sides of what is obviously a yawning chasm between business failure and any sentiment of stability.
“What our survey highlights is a much greater opportunity and need for governments to leverage supportive policy in areas such as business tariffs and maintaining the current rate of VAT at the beyond March.
“We also need to see a commitment to support a robust marketing campaign to drive the international market that our visitor economy so depends on.
“The window of opportunity from an international perspective will close in March – so the next few weeks are crucial for securing international bookings and hope for a relatively buoyant summer season.”
A SkyeConnect spokesperson said: “The results of the STA survey are deeply worrying. They demonstrate the undeniable impact of preventing hospitality businesses from trading at one of their busiest times of the year. SkyeConnect conducted its own survey in early December and what was noticeable was the sudden shift in sentiment from growing optimism in October/November to pessimism in December.
“In addition to the direct financial packages, we support the STA’s call for reduced tariffs for businesses and maintaining the current VAT rate beyond March.
“It is also vitally important that government messaging focuses on restoring public trust so that businesses start to see an increase in bookings for this spring, summer and beyond.”
The SkyeConnect survey in mid-December showed 78% of local businesses suffered cancellations, costing tens of thousands of pounds, following Scottish Government advice that the public should avoid Christmas parties at work amid the rise of the Omicron variant.
Article by JACKIE MACKENZIE