One in three tourism businesses fear they will close this year, survey finds

The findings came from a Scottish Tourism Alliance survey which received responses from 1,335 firms.

Some 35.9% of respondents said their business was quite likely or very likely to fail this year (Jane Barlow/PA) (PA Wire)

One in three tourism businesses in Scotland fear they could close in the coming year, a new survey has shown.

Tourism and hospitality businesses have been among the hardest hit across the economy during the pandemic, spending long periods closed or with limiting restrictions in effect.

The figures, which were presented to Finance Secretary, Kate Forbes, by the Scottish Tourism Alliance (STA) on Tuesday, come as the Scottish Government announced £9 million of funding for the industry to counter the “severe economic impact” of the Omicron variant.

The now-dominant strain of Covid-19 resulted in the cancellation of a number of tourism events, including Edinburgh’s Hogmanay celebrations.

The strength in the number of responses to the survey shows just how anxious tourism businesses are

Marc Crothall

The STA survey received 1,335 responses across all but one local authority areas in Scotland.

Some 35.9% of the respondents said their business was either quite likely (27.9%) or very likely (8%) to fail.

STA chief executive, Marc Crothall, welcomed Government funding, including the £9 million investment announced on Wednesday, but said it was unlikely to “touch the sides” for most firms.

“The strength in the number of responses to the survey shows just how anxious tourism businesses are to communicate the level of deep financial pain and commercial instability they’re experiencing as a result of the recent measures introduced and, of course, the dip in consumer confidence in line with public health messaging,” he said.

“Emergency financial support from the Scottish Government has been hugely welcomed by the sector, including today’s announcement of a further £9 million for the sector to be assigned to coach businesses, day and tour operators, hostels, inbound tour operators, outdoor and marine activity operators and visitor attractions.

The spread of the Omicron variant resulted in the cancellation of major tourism events, including Edinburgh’s Hogmanay celebrations (Jane Barlow/PA) (PA Wire)

“However, 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.”

Mr Crothall went on to call for policy changes to help boost the industry, including a commitment to a major marketing campaign and retaining the 12.5% rate of VAT beyond the March cut off.

However, the survey showed the businesses believed sector-specific grants were the best way to keep them afloat.

When asked to grade government actions out of 10 in terms of importance, firms graded further funding for grants an average of 7.7.

Tourism minister, Ivan McKee, announced the funding on Wednesday.

The money includes £6 million from a £375 million business support package already announced by First Minister, Nicola Sturgeon, as well as £3 million that has been “repurposed” from the first phase of the Tourism Recovery Programme.

It will be split between affected businesses across the tourism sector, with coach operators, day tour operators, hostels, inbound tour operators and visitor attractions all eligible for help.

However, the tourism minister was realistic and – agreeing with Mr Crothall – acknowledged the funding will not “cover all losses”, as he promised the Scottish Government will continue to lobby Westminster for more support.

Mr McKee said: “We recognise that the public health measures necessary to limit the spread of Omicron have had a severe economic impact, especially for affected businesses in the hard-hit tourism sector.

“We have now allocated up to £9 million to help ease the impacts of the pandemic on Scotland’s world-class tourism sector and ensure that affected businesses can survive what is clearly an especially tough winter period and be ready to trade fully in the spring and summer months.

“We know this won’t cover all losses and will continue to press the UK Government for more comprehensive support.”