A new survey of tourism and hospitality businesses in the south of Scotland has highlighted the difficulties many operators face in a worsening national and global economic climate.
The South of Scotland Destination Alliance's (SSDA) research shows that while more than 70% of the 100 respondents were neutral or optimistic about their trading and turnover prospects in the coming year to two years, there is growing concern about challenges to ‘keep the lights on’ as costs and inflation soar, while consumer confidence dips.
The vast majority of self-caterers and B&Bs expressed serious concerns about the impact of forthcoming short-term let licence requirements on their business, with two thirds of self-caterers in favour of the legislation being paused.
More than a quarter (27%) of businesses said they may have to close permanently due to the current climate, including 50% of B&Bs.
Rising energy, fuel and insurance costs are having the biggest impact on businesses, along with falling consumer confidence and below pre-Covid visitor numbers.
More than half of the respondents felt neutral or pessimistic about their businesses performance for the next three to six months, however more than two thirds report feeling neutral or optimistic regarding the next 12 to 24 months
Businesses cited concerns about rates and VAT returning to normal levels, despite them still being in ‘recovery mode’.
Feedback from those operating at lower capacity also indicated staffing shortages and the cost of living crisis as reasons for lower trade.
The overwhelming priorities for the next six months are monitoring cashflow (78%), reducing overheads (68%) alongside a priority to focus on marketing (69%), actively working to become more sustainable (64%) and collaborations (63%).
Comments submitted in response to the survey included: “The current cost of living crisis feels much, much bigger than Covid as a risk to business survival and growth.
“This is compounded by the fear of how much it may spiral and just so many unknowns about what's to come - staff are exhausted - we haven't had a normal year in a very long time so it's very difficult to have any kind of plan.”
The SSDA’s interim chief executive Melanie Allen emphasised that the tourism body will continue to do everything in its power to support its members and the wider south of Scotland visitor economy, using the research insights to shape its immediate and medium-term priorities and activities.
“While the overall results are a bit of a mixed bag, it’s quite stark to note that a really significant proportion of regional businesses fear they may have to shut their doors for good given the exceptionally challenging economic climate we’re in just now.
“Over the next few months we will be engaging with businesses on marketing campaigns, tourism industry insights, webinars and workshops as additional support.
“I will shortly be writing to MSPs on behalf of the SSDA, setting out the immediate and medium-term priorities and needs of the tourism and hospitality sectors in the south of Scotland, to inform their budget-setting and decision-making into 2023.”
Marc Crothall, chief executive of the Scottish Tourism Alliance, said: “Scotland’s tourism industry is currently facing a multitude of challenges, from the decline in consumer spending due to the cost-of-living crisis and rise in inflation to the significant costs of merely keeping businesses open in significantly challenging times.
“The ‘golden quarter’ of trading which is between now and the end of the year should be delivering buoyant results and high levels of business confidence, however businesses across the sector are feeling the acute impact of the current economic challenges and are simply unable to deliver the service they would wish to.
“The Scottish Tourism Alliance will continue to steer the industry through this exceptionally difficult chapter and I know the economic landscape will be the focus of many conversations with the 20+ MSPs who are attending the Tourism Industry Conference evening reception at the EICC on 9 November.”
The SSDA plans to roll out another survey in the New Year to take the temperature of the industry during the difficult winter period.
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