Rising costs, problems with staff recruitment, the squeeze on household expenditure and Brexit uncertainty are combining to cause problems for the tourism trade in Scotland.
The issues are revealed by research from the Scottish Tourism Alliance (STA), which found the fall in sterling had boosted inbound tourism – but also uncovered a host of challenges for tourism firms.
Marc Crothall, STA chief executive, said: “The overriding theme to emerge from the research is that, despite confidence which many businesses have attributed to the buoyant season we’ve had and the favourable exchange rates for tourists, sectors within Scotland’s tourism industry are experiencing several different challenges.
“There is not one particular cause for concern within tourism businesses, rather it is the ‘perfect storm’ of factors, a term so often used to describe the current situation within our industry which is leading to rising business costs and falling profitability.”
Called Tourism businesses – confident or concerned?, the report is based on research with almost 400 tourism businesses.
Nearly two thirds (63%) of respondents were confident in the future performance of their business heading towards 2020.
However, the most significant challenges were the rising costs of utilities; economic and political uncertainty; the growth in business rates; the rising costs of food and drink; costs of recruiting and retaining staff; and the squeeze on household expenditure.
Businesses which expressed a lack of confidence were concerned by the uncertainty around Brexit, the possibility of a second Scottish independence referendum and the potential decline in an international workforce.
Almost half predicted an increase in profits over the next three years and more than a quarter of tourism businesses expect a decrease in profit.
Scottish tourism secretary Fiona Hyslop said: “Our tourism sector is of vital importance to the Scottish economy. It is important, now, more than ever, that we succeed in making Scotland a destination of first choice.”
Pictured: Scottish dancers at Inveraray Castle, Scotland. ©VisitBritain/Andrew Pickett