THE cost of staying in business for companies in the Scottish tourism industry has spiralled to unprecedented levels, with political upheaval ramping up the pressure even further on the sector.
The Scottish Tourism Alliance will lay bare the extent of the task currently facing the sector as it unveiled a new research project into the impact escalating costs have had on the industry at its conference in Glasgow today.
It argues that Scottish tourism has been hit with a ‘perfect storm’ of costs in the last five years, citing the “unprecedented” burden brought by factors such as the National Living Wage, pension auto-enrolment, business rates, and the apprenticeship levy. Now it is seeing overheads soar because of the collapse in sterling since last summer’s Brexit vote, and its ability to hire staff from around Europe threatened as a result of the decision to leave the EU. However the weaker pound has made Scotland more competitively priced for foreign tourists.
Marc Crothall, chief executive of the STA, said the media impact of major events creates the misleading assumption that tourism is a “wealthy industry and can afford to pay out lots of big, increased taxes.”
“But it’s tough out there,” he said. “Over the last five years the costs which have come our way have started to erode the bottom line quite significantly, in proportion to the amount of revenues that have grown the other way.
“What we want to be able to do, through this research, is to be able to demonstrate that this is the reality of the costs the sector already absorbs. To be a long-term resilient sector that can provide a huge amount of economic growth, we need a better playing field to allow businesses to invest.”
The research, which the STA is carrying out with French Duncan and aims to publish by June, comes after the sector mounted a vigorous campaign against massive hikes in business rates, which threatened the viability of hundreds of hotels and bars. It was successful in forcing the Scottish Government to put a 12.5 per cent cap in rates rises for the first year following the 2017 revaluation of business rates, which takes effect in April.
Mr Crothall, who is launching the research as part of Scottish Tourism Week, said the prospect of rates rising by hundreds of per cent had been the “tip of the iceberg” for many. “It’s just been the final nail, [given] the other costs that have come into the sector,” he said. “In many cases it was absolutely going to be the ‘shut the door job’.”
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