MORE than a quarter of Scotland’s tourism businesses are expecting profits to slide in the next three years due to a “perfect storm” of concerns.
Uncertainty over the impact of Brexit, the prospect of another independence referendum being called and soaring costs are all said to be damaging confidence in the sector.
Less than a quarter of firms said they were planning to either expand or diversify, while less than half were expecting their profits to rise.
Difficulties recruiting and retaining staff, the instabilty of exchange rates and the impact of business rates rises were all cited as key areas of concern.
Research for the Scottish Tourism Alliance said the industry was heavily reliant on “non-UK labour to provide the service and fill the jobs that cannot, or that UK workers simply do not, want to do.”
Nearly 400 hotels, bars, restaurants, B&Bs and attractions, were surveyed over for the study, which the legal firm Anderson Strathern and chartered accountants French Duncan also worked on.
Paul Brown, a partner at Anderson Strathern, said: “Brexit is a double-edged sword for the industry. On the one hand, the weak pound has led to an increase in visitors, but that’s also had an adverse effect of the number of foreign workers, particularly eastern Europeans, who are willing to come to this country to work.
“We’ve come to rely on these workers, who have helped to fuel the growth in the sector. The drop in the value of the pound because of the Brexit vote, even before we have actually left the EU, has resulted in many of them choosing not to come to the UK as it is no longer as lucrative for them.
“Brexit has led to uncertainty amongst those workers about their future here. Many are voting with their feet and not returning to or staying in the UK.
“Growth in employment costs, the instability of sterling and difficulty in recruiting and retaining staff were all highlighted as having an impact on future sustainability and growth. The availability of a trained workforce, or even a workforce at all, is of real concern.”
Marc Crothall, chief executive of the STA, said: “The overriding theme to emerge is that sectors within Scotland’s tourism industry are experiencing a number of different challenges. There is not one particular cause for concern within tourism businesses, rather a ‘perfect storm’ of factors, which is leading to rising business costs and falling profitability.”