Hospitality firms ‘do not have cash for next quarter’

The Scottish Tourism Alliance has published the results of its latest quarterly industry survey — showing that almost half of tourism and hospitality businesses “do not have enough cash reserves for the next quarter.”

The survey reported that 52% of businesses in the industry that responded are still in “survival mode” or “consolidation.”

Only 1% of respondents said their business was ready to expand.

More than 540 tourism businesses took part in the survey from May 24 to June 14, with responses coming from all 32 of Scotland’s local authority areas and 21 core industry sub-sectors of the tourism industry — predominantly self-catering, bed & breakfast/guest houses, hotels, bars and restaurants, visitor attractions and tour operators.

Nearly 60% of businesses said they want the Scottish Government to “hold off on introducing and progressing additional regulations until the economy further recovers.”

About 39% of businesses responded that current domestic bookings for June to September this year are lower compared to the same period in 2022.

And 49% said they do not support the introduction of a visitor levy and a quarter of those that do, only do so only if the net revenue raised is “used solely for tourism investment and enhancement.”

STA CEO Marc Crothall said: “There has been a strong response to the survey, particularly from the self-catering sector which reflects the current climate of concern around the impacts of proposed legislation.

“It is also clear from respondents across other sectors that businesses continue to experience significant challenges, however, pleasingly there is an increase in customer demand and subsequently, a renewed feeling of optimism within sector.”

“The reality is that healthy trading is all about the bottom-line performance of the business; while revenue may be strong for many businesses, the key to commercial success lies in the ability of that business to convert profit into sustainable recovery and growth.

“A holistic review of the current regulation and taxation environment is just one key action needing to be undertaken now before more damage is done to the sector, as a result of a multiple of consequences.

“The Regulatory Review Task Force must act quickly.

“The recommendations currently being developed by the New Deal for Business Core and Sub groups when finalised must also be endorsed and acted on quickly to not only help protect business failure, but importantly to improve Scotland’s economic conditions, performance and to create a better environment to do business.

“I very much hope that the work of these groups, will lead to the delivery of more positive economic benefits for Scotland which will see us able to compete far more effectively as a global tourist destination.”

Stephen Leckie, STA chair and CEO Crieff Hydro Family of Hotels said: “The survey results very much echo what I’m seeing and experiencing as a business owner.

“Recruitment continues to be a serious challenge from my point of view; the removal of a significant part workforce as a result of Brexit is curtailing the ability of businesses to operate with a full service, deliver the experiences we would wish to and invest in our product with the ambition we hold.

“The continued cost pressures on tourism and hospitality businesses combined with the constraints around operations as a result of the recruitment crisis greatly diminishes the profitability of businesses in our sector, the quality of experience, our competitiveness as a destination and therefore the long-term outlook for Scotland’s tourism and hospitality industry.

“We urgently need a meaningful intervention in relation to working visas and immigration policy to give businesses that essential opportunity to grow and deliver much stronger benefits to our communities and Scotland’s economy.”