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The Scottish Tourism Alliance – Pre Budget Submission to Scottish Government

The following letter has ben sent to the Deputy First Minister, on behalf of tourism businesses in Scotland.

Dear Deputy First Minister,

Please find attached the Scottish Tourism Alliance (STA) pre budget submission which has been developed in consultation with the STA Board STA  Counciland our STA Destination Forum Members.

Scotland’s tourism industry is at a crossroads. Before the COVID-19 pandemic, the tourism sector contributed £4.5 billion in gross value added to Scotland’s economy, employing 229,000 people, around 9% of employment in Scotland[1]. However, its future – and many of the small businesses it supports – are at risk.

When the First Minister launched the country’s new tourism strategy, Scotland Outlook 2030, in March 2020, little did we know that the sector would experience extraordinary challenges in the face of multiple lockdowns and restrictions due to the COVID-19 pandemic.

As businesses continue to recover, we now face a new set of challenges as tourism, hospitality and retail contend with unprecedented rising costs in doing business, which include escalating energy prices, increasing costs of goods and materials, and a 40-year high in inflation. This is coupled with a cost-of-living crisis with significant impact on consumer spend, particularly within the tourism and hospitality sector.

As the overarching lead representative body for Scotland’s tourism and hospitality industry, we welcome the support that the Scottish Government continues to give the sector and your recognition that an innovative, resilient, and welcoming industry is not only of vital importance to Scotland’s economy, but also its place in the world.

To achieve our shared vision of Scotland becoming the world leader in 21st century tourism, now is a critical time to ensure that the industry can survive and recover to make this ambition a reality.

Policy, investment, and positioning are three of the six conditions for success agreed in Scotland Outlook 2030. Tourism also has a central role to play in delivering the priorities set out in Scotland’s National Strategy for Economic Transformation (NSET) and the Net Zero agenda.

Our survey at the beginning of the summer period (17th May 2022 to 8th June 2022) found that more than half of tourism businesses were still not in recovery following the COVID-19 pandemic and that this could take at least another year or more, with 23% describing their business as in survival mode and financially fragile.

At the same time, we reported that a considerable number of tourism businesses had already begun to experience a decrease in customer discretionary spending compared to the same period in 2019 (52% of respondents) and 2021 (38% of respondents).

As households look to further reduce their spending in the face of rising costs, the tourism sector is predicted to once again be one of the main casualties. We are already hearing from our members that businesses are actively considering reducing their trading hours or feel financially forced to close for the winter season.

We are gravely concerned that some businesses might never reopen again, impacting on employees and wider communities, and loss of tax revenues for government. Losing businesses now could permanently reduce Scotland’s tourism capacity, resulting in wider economic and social knock-on impacts, particularly in rural areas. The uncertainty facing these businesses is also having an uncountable toll on the mental health of their owners and staff.

Out of the 744 survey responses we received, the extension of business rates relief and greater investment in tourism promotion were listed as the two most immediate and effective policies that the Scottish Government could implement to support recovery.

We would also reiterate the need to pause new and impending regulations to take some of the burden off businesses during this turbulent and uncertain time.

We urge the Scottish Government to adopt these three policies as an immediate priority to support our tourism industry.

Thank you for your ongoing support and partnership, as we continue on the path to achieving the ambitions of Scotland Outlook 2030 and delivering economic prosperity for all Scotland’s people and places.

Yours sincerely,

Marc Crothall

Chief Executive

Scottish Tourism Alliance

Scottish Tourism Alliance SG Pre-Budget Submission – 20 Sept 2022

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