One in three Scottish tourism and hospitality businesses predict failure in 2022

One in three tourism and hospitality businesses in Scotland have stated that they are likely to fail in 2022, according to a recent survey conducted by the Scottish Tourism Alliance (STA).

The survey, which ran from 17 December to 10 January, took place across 1,335 businesses in Scotland’s 31 regions. Just over half of all respondents stated they had either zero or just one to two months of cash reserves to stay afloat.

Of the respondents, 68% stated they were in financial difficulty, citing extreme concern over increased costs, particularly in relation to utilities, reduced revenue or a combination of both as contributory factors; and 52% said they had been affected by staff shortages, the majority in the hospitality sector.

In terms of support needed to make a difference to business recovery, sector specific grants were seen as the most value, particularly within the food and drink sector, including hospitality businesses.

Retaining the 12.5% rate of VAT was also viewed as a priority action for recovery and the removal of restrictions was stated as likely to make a key difference to all sectors in the tourism industry.

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… 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.”

The Scottish government has been accused of leaving hospitality "in limbo" after delaying the decision whether to ease Covid restrictions on the sector until next week.

Tougher measures were brought in after Christmas including the reintroduction of social distancing rules, limiting outdoor events to a capacity of 500 people, reintroducing one-metre social distancing in indoor hospitality and requiring venues selling alcohol to return to table service. The measures were due to last at least three weeks.

Following a review on 11 January, first minister Nicola Sturgeon announced that outdoor event capacity restrictions will be eased from Monday 17 January, however the decision of whether to ease further measures was pushed until next week.

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