Hospitality sector's hangover adds to economic concerns

More than four out of ten Scottish pubs, clubs and smaller hotels suffered a fall-off in trade at the end of 2016, fuelling concerns about the nation's hospitality sector amid warnings about further pressures this year.

The Scottish Licensed Trade Association said 44% of its members suffered a decline in festive sales. Picture: Jacky Ghossein

Survey findings released by the Scottish Licensed Trade Association (SLTA) found that after a reasonably positive summer, 44 per cent of businesses reported a decline in sales over the Christmas period with 30 per cent seeing growth and a further 26 per cent reporting static trading.

For the full year, 28 per cent reported an improved performance, which was down from 39 per cent the previous year.

The SLTA warned rising costs from increased rateable values and rising utility bills will add to the difficulties being felt by many in the sector.

The report came as the Scottish Chambers of Commerce also warned today that businesses face a barrage of challenges in 2017 including rising prices, tightening cash flow and profitability, the impact of exchange rates on import costs and the burden of business rates.

The warnings came on the back of GDP figures yesterday which showed the economy in Scotland is already only growing at a third of the rate of that of the UK as a whole. Scotland’s economic output increased by 0.2 per cent between July and September, compared to a rise of 0.6 per cent for the UK as a whole.

The SLTA’s third annual Christmas/New Year report, produced in conjunction with KPMG, was based on research from 600 retailers. Paul Waterson, chief executive of the SLTA, said that over 60 per cent of respondents said they were being hit with higher rateable values, with average increases of 14 per cent, whilst over 70 per cent are seeing increases in the cost of utilities.

“We also continue to see huge pressure for retailers serving rural and tourist locations with over 50 per cent showing a decline over the festive period versus the prior year,” said Waterson.

“Many village pubs are integral to tourism and the community within rural areas, and the decline in this area is sadly likely to lead to further closures and wider impacts on tourism and employment.”

He said respondents highlighted government legislation on drink driving and changes to rateable value as the biggest macro-economic challenges facing their businesses.

The Scottish Chambers of Commerce’s quarterly economic indicator report, which covers key sectors including construction, financial and business services, manufacturing, retail and tourism, found a generally positive outlook for 2017.

But Neil Amner, chair of the organisation’s economic advisory group, cautioned: “The balance of optimism is very fine, so the difference between a good year and a bad year could rest upon the slightest of influences.”

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