Scotland’s tourism industry warns Scottish Budget still raises serious concerns for economy
Marc Crothall MBE, Chief Executive of the Scottish Tourism Alliance (STA), said:
“Today’s Scottish Budget has acknowledged some of the intense pressure facing Scotland’s tourism and hospitality sector, but unfortunately, the levels of transitional relief and support announced to stabilise the industry and restore confidence still fall way short of what is needed now.
In the days and weeks leading up to the Budget, tourism and hospitality organisations, business groups, chambers of commerce, small business representatives and Business Improvement Districts were united in warning that failure to act on business rates would push businesses to the brink. While the Scottish Government has responded with a package of modest short-term mitigation, the underlying issues within the system remain unresolved.
The introduction of transitional relief, reductions to the basic and intermediate rates, and the modest 15% of non-domestic rates relief for retail, hospitality and leisure businesses will provide temporary breathing space for some, but not nearly enough to prevent potential closures and job losses. The continuation of the Small Business Bonus Scheme and 100% relief in islands and designated remote areas will be welcome for the businesses and communities most exposed to rising costs.
However, these measures do not respond to the scale of the challenge facing tourism and hospitality businesses across Scotland. Relief is capped, time-limited, and does not address the volatility created by revaluation or the cumulative burden of rising costs, leaving many businesses still on the precipice of commercial viability.
Recent STA research shows more than 70% of tourism businesses expect conditions to worsen. Nearly half are delaying or cancelling investment. 15% expect to make redundancies within months, and many have already cut costs as far as they can. There is no slack left in the system – margins are wafer-thin.
The options available to businesses in our sector are limited, and all will come at a significant and far-reaching cost. Some businesses will try to raise prices, despite consumers having less money to spend, ultimately increasing customer expectations around quality, which raises concerns when the ability to invest and deliver that quality is so constrained.
Additional investment announced for VisitScotland, including funding to support the Rural Tourism Infrastructure Fund and continued backing for major cultural and sporting events, is welcome. This investment will help with destination promotion, regional infrastructure and short-term visitor demand, but it does not address the core cost, competitiveness and viability challenges facing tourism and hospitality businesses on the ground
Tourism is one of Scotland’s most important economic drivers, capable of accelerating growth and strengthening public finances. This Budget was an opportunity to stabilise the sector and put it on a path to deliver its full economic potential. While some short-term relief has been provided, the opportunity has not been fully realised.
The STA has set out a clear economic mandate for the next Parliament in our Holyrood Election Manifesto. As we move into the final months before the Scottish Parliament election, we are calling on all political parties to commit to a fairer and more proportionate business rates system that supports investment, jobs and long-term competitiveness.
Tourism and hospitality businesses want to invest, grow and support communities across Scotland. Without decisive reform, the consequences of continued uncertainty will be felt within and far beyond our sector.”
ENDS
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Mhairi Wilson
Shine PR
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Notes for Editors
About the STA
The Scottish Tourism Alliance (STA) is the representative body for Scotland’s tourism and hospitality industry. Its membership spans hundreds of businesses, trade associations, destination organisations and other stakeholders. The STA works with government, parliament, public bodies and communities to influence policy and champion tourism as a driver of Scotland’s economy, employment and international reputation.
