Poll reveals one in three Scottish tourism and hospitality operators at risk of collapse

One in three of Scotland's tourism and hospitality businesses have warned they are at risk of collapse this year.

Wednesday, 12th January 2022, 5:17 pm

Just over half of the 1,335 respondents to a new nationwide survey said they had been left with no cash reserves or only a couple of months to help them stay afloat.

The survey, conducted by the Scottish Tourism Alliance (STA), the main voice of the industry north of the border, found more than two thirds of operators were in financial difficulty.

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The Scotsman Lounge is one of the most popular pubs on Cockburn Street in Edinburgh. Picture: Lisa Ferguson

More than a third said they had lost more than half of their anticipated business in December, when “stay at home” pleas were issued by the Scottish Government before new restrictions were announced four days before Christmas.

One in four operators said they had also lost more than half of their bookings for the first three months of the year.

Hospitality and tourism industry leaders have expressed dismay after the Scottish Government revealed it was considering extending the kind of venues covered by its Covid certification scheme, which requires people to show proof of vaccination or a negative lateral flow test to gain entry to nightclubs and certain events.

The STA revealed its survey findings hours after the Government announced details of a new £9 million support package for the industry, which will be distributed among coach and tour operators, outdoor and marine businesses and hostels.

Nightclubs across Scotland been ordered to shut under the country's latest Covid restrictions. Picture: Oli Scarff/AFP via Getty Images.

The Scottish Government has ringfenced £108m for hospitality businesses, £5m for nightclubs, £65m for the culture and events sectors, and £8m for food and drink suppliers.

Just over half of those surveyed by the STA said they had been impacted by staff shortages over the past few weeks, when the poll was carried out.

More than two thirds of respondents cited increased costs, plummeting revenue or a combination of both behind their financial difficulties.

The removal of Covid restrictions was said to be the most popular government measure to encourage recovery and make a difference to operators.

One in three Scottish tourism and hospitality operators have warned they are at risk of failure this year. Picture: Lisa Ferguson

STA chief executive Marc Crothall said: ““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.

"Emergency financial support from the Scottish Government has been hugely welcomed by the sector, including the announcement of a further £9m.

“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.

“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.

“The window of opportunity from an international perspective will close in March. The next few weeks are therefore critical for securing international bookings and the hope of a relatively buoyant summer season.

"Positive messaging in relation to safety around travel to and within Scotland will also be essential to restore public confidence.

"All businesses across every part of the sector in Scotland are experiencing a rapid increase in costs combined with significant financial losses. 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.”

Leon Thompson, director of UKHospitality Scotland, said: “The results from this important survey are stark, particularly with around a third of businesses saying they fear for their viability in 2022.

“Tourism and hospitality need a good year to stand any chance of coming back from two years of closures and restrictions.

"If that doesn’t happen and we lose more of our businesses, then Scotland’s ability to deliver a world leading visitor experience will be diminished.”

A spokesman for the Night Time Industries Association Scotland, which represents nightclubs and live music venues, said it was “very worrying" the Scottish Government was considering extending the cope of the Covid certification scheme.

A spokeswoman said: “Additional restrictions in Scotland have had little impact on case rates, but have had a serious impact on Scottish businesses and jobs.

“It is also of concern that of the support funding already announced, a majority has gone to sectors other than hospitality.

"The funding already committed by Scottish Government to enable businesses to retain and pay staff wages over the festive period must now be expedited at speed as the ability of employers to fund payroll from their existing cashflow is seriously at risk, along with the jobs supported by these businesses.

"Furthermore, we call on Scottish Government to now urgently release all remaining unallocated funding to compensate Scottish nightlife and hospitality businesses for the disproportionate restrictions currently in place, and commit to a full reopening without any further restrictions.”