SCOTTISH tourism and hospitality leaders have warned the industry remains under huge financial pressure, as they welcomed new figures which revealed a leap in domestic day visits by people from Great Britain in the first quarter of the year.
Tourism day visits in Scotland undertaken by British residents climbed by 12% in the first three months of the year, generating £1 billion of spending in the Scottish economy.
The figures, contained in the latest Great Britain Day Visits Survey, provided some encouragement to the Scottish tourism industry as it strives to recover to full strength following the pandemic.
However, industry groups warned that firms continue to feel the strain from severe cost inflation, amid high interest rates and weak consumer sentiment, which continues to undermine their viability.
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The challenges facing the tourism industry were underlined by a survey published by the Scottish Tourism Alliance (STA) in June, which found more than half of firms were still in “survival mode” or consolidating following Covid. The report, which surveyed 540 businesses, highlighted ongoing pressure on costs and that staff recruitment remains a “serious challenge” following Brexit, which ended the free movement of people between the UK and countries in the European Union.
Marc Crothall, chief executive of the STA, told The Herald: “The latest figures on domestic day visits during Q1 in Scotland are certainly encouraging, however this masks a very different picture in relation to the commercial viability of many businesses across our tourism sector and the long-term competitiveness of Scotland’s tourism product.
“The reality is that Scottish tourism is some way from being back to full strength. The most recent Scottish Tourism Alliance survey results, published in June, found that more than half of tourism and hospitality businesses (52%) are still in survival mode or consolidation following Covid 19 and the ongoing financial crisis, and only 1% of respondents said their business was ready to expand.
“This is not the picture of health portrayed by today’s figures or the reporting of top line figures. Our survey found that 16% of businesses that responded have no cash reserves, while just over a third (34%) have only one to three months of reserves.
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"Excessive energy costs, food inflation, an increase in wages, the cost of regulation and other costs just to stay in business are all having a bearing on a very tight bottom-line margin along with rising interest rates and the subsequent cost of debt which has been carried over from the pandemic.”
Leon Thompson, executive director of UKHospitality Scotland, warned persistent pressure from cost inflation means many businesses remain mired in a “parlous financial state”.
Mr Thompson said: “It is encouraging that day trips remained strong in the first quarter of this year, with spend high. Scotland is a fantastic destination, offering unrivalled experiences to visitors. However, setting these figures against the backdrop of inflationary pressures faced by our businesses, many hospitality venues remain and are slipping further into a parlous financial state.
“What would have helped is support from the Scottish Government on business rates in the Scottish Budget. However, despite numerous requests for the 75% rate relief to be passed on to our businesses in Scotland – support benefitting businesses in England and Wales – assistance has not been provided.
“Hospitality is the essential ingredient in Scotland’s tourism offer. The country cannot afford to see businesses close, diminishing the visitor experience and undermining the country’s ability to keep attracting visitors from across the UK and the world.
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“Whilst the delay to the deposit return scheme – due to have begun this month – has given our businesses some breathing space, it has not gone away. Now, with the Scottish Parliament considering the introduction of a visitor levy and a charge on disposable cups, the regulatory burdens and costs to hospitality businesses continue to mount up.”
The Great Britain Day Visits Survey measures the volume and value of domestic day visits by local residents, and is jointly sponsored by VisitScotland, VisitEngland, and VisitWales.
It uses two main measures for day visits: three hours or more leisure day visits (by adults and accompanied children lasting for three hours or more, including travel time, to undertake one or more eligible leisure activities), and tourism day visits. The latter is classified as a subset of three hours or more leisure day visits, which must meet the additional criteria of being undertaken less often than once a week and include a visit to a destination outside the local authority where the visit started.
The latest survey found Great British residents undertook 71.6 million leisure day visits lasting three hours or more in Scotland in the first quarter of the year, with £2.6 billion spent during these visits. It noted that 29% of leisure day visits taken in Scotland were tourism day visits, adding that there were 20.6 million tourism day visits taken with an associated spend of around £1bn.
It also found that around 11% of all Great Britain three hours or more leisure day visits and 9% of tourism day visits included a visit to Scotland. The share of total GB spend was 10% for three hours or more leisure day visits and 9% for tourism day visits in Scotland.
Scottish tourism minister Richard Lochhead said: “Scotland is increasingly seen as an attractive place to visit and we strive to support and work with the tourism and hospitality sector to grow its economic value, while delivering the very best for visitors, businesses, and communities.
“I recognise the importance of the tourism and hospitality sector for Scotland’s economy and these encouraging statistics reinforce the resilience, creativity, commitment and innovation of the sector in response to what has been an incredibly challenging time.”
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