Marc Crothall: Challenges on every front, but tourism will deliver for Scotland this summer

It’s been a slow start across all sectors, according to research the Scottish Tourism Alliance published this week. We took an in depth look at how the sector’s recovering from the effects of the pandemic and Brexit and have found that not only are summer and forward bookings down, almost 40 per cent of businesses have reported a decrease in spending since May 2021.

More than 700 tourism businesses took part in the survey which ran from 17th May to 8th June, with responses coming from all 32 of Scotland’s local authority areas and 15 core industry sub-sectors, predominantly self-catering, hotels, bars and restaurants, bed & breakfast, visitor attractions, guest houses and tour operators.

50% of businesses say they have fewer than normal bookings for the period of June-August in comparison to this time in May 2019; bookings this summer are perceived by businesses to have been impacted by the UK cost-of-living crisis, the appeal of outbound international travel, Scotland’s inability to compete internationally on price and value for money, and people taking late decisions on holiday destinations.

While disappointing for Scotland’s tourism industry, it’s not a surprise. We knew recovery was going to be much slower for our sector and we saw the red flags ahead earlier this year around the likely impacts of rising energy costs, increases in supplier costs and the ongoing recruitment crisis.

It seems we can turn very few corners without significant threats presenting themselves on the near and distant horizons.

The cost-of-living crisis is hitting Scotland’s tourism sector very hard. People are clearly hesitant about committing to booking a break due to household financial challenges and uncertainty, consumer spend is down and with the rise of energy prices and supplier costs, many businesses are finding that the level of recovery is almost static. This impacts the ability for our tourism industry to remain competitive globally; we are struggling to compete on price and we’re unable to retain and attract the quality of staff required to deliver the level of service demanded by today’s consumers.

The majority of our businesses cannot move beyond running to stand still, despite the fact that we’re now almost into the main tourist season. The current transport disruption and rail strikes only make the challenge that much harder. The market remains worryingly fragile.

In relation to the recruitment crisis, 60% of hotels, 43% of visitor attractions and 45% of bars, pubs, restaurants, cafés and takeaways say they are unable to trade effectively with the level of staff they’re currently operating with. The top three barriers to retention of staff are business seasonality, other sectors being perceived as being more attractive, and an inability for business to pay more competitively.

Customer uncertainty is at an all-time high, which is reflected in the forecasts and future bookings. The perpetual threat to businesses’ commercial viability is something our industry has steeled themselves to deal with.

So, much greater support is needed by way of financial levers from both the UK and Scottish governments which could offer the industry the breathing space it needs to move at what is a much slower than predicted pace through recovery and build towards long term acceleration.

Despite recovery being slow, the resilience, grit and determination of our industry and the will to adapt, pivot and innovate has ensured that we do keep moving, however slowly. More than 60% of businesses have adapted their business model to give them the best possible chance of commercial viability in the current climate

Tourism is and can continue to be a force for good. It was very heartening to see from our survey that 86% of respondents have invested in transitioning to a greener business, this underlines the potential for tourism to deliver transformational change in relation to the Scottish Government’s Net Zero ambition.

There are some indications of positive recovery; businesses in the sector who have been able to

invest and adapt quickly with the right number of staff in place are doing better than others.

The outlook is patchy though and the autumn/winter forward bookings window remains worrying.

The STA will continue to call on the UK government for a lowering of VAT and a change to UK Immigration rules which are deemed by the majority in our industry as the most effective policies to support businesses. We will also continue to push the Scottish Government to extend business rates relief beyond this month and commit to much greater investment in tourism promotion of Scotland as a destination.

Improved infrastructure and transport, removal of policies which seek to impose further tax business and on tourists, and improved quality of the visitor experience were the top three things that businesses listed that Scotland needs to do, to be a more globally competitive tourist destination.

In the meantime, we must look forward to a what could be a vibrant summer season with the return of the events and festivals Scotland is known for hosting the world over and the return of the international market and take every opportunity to show the world our very best.

We cannot control many of the environmental conditions which negatively impact our industry’s ability to deliver our recovery and growth ambition, however we can take some comfort that the sector has risen to huge challenges over many years and we remain focussed as an industry in delivering the very best possible experiences to all who visit and enjoy Scotland’s summer.

It is those experiences which we hope will be front of mind for all who are planning a new or repeat visit to our wonderful destinations.

Marc Crothall is chief executive of the Scottish Tourism Alliance