Willie Macleod, executive director for Scotland with trade body UKHospitality, told MSPs the impact on the workforce for hotels and guest house could limit growth.
Giving evidence to Holyrood’s Economy Committee today, he said: “The tourism industry has huge opportunity for growth, and certainly in hospitality, notwithstanding the well-publicised recent difficulties of some businesses in the casual dining sector.
“I think we still see massive opportunity for growth, but I think that growth has the potential to be constrained by the labour market.”
He said on average the hospitality sector in Scotland is about 18 per cent non-UK workers, comprising both EU and non-EEA nationals, but in some city centre hotels staff from outside the UK made up 65 per cent of the workforce.
“To keep it in proportion, in hospitality we’ve got about quarter of a million people who are UK citizens employed in our industry but if, as seems likely, we’re going to see free movement ending, our industry is going to be in pretty serious trouble,” he added.
“Part of that is, if free movement ends, I think we have to look at UK-level at a fairly radical review of the immigration system.
“The current tiered system of tiers one to five will not work for our industry given the way it is structured.”
The committee also heard from James Withers, chief executive of Scottish Food and Drink Ltd, who said Brexit is a “short-term hurdle we need to clear”.
He said 30 per cent of the workforce are EU nationals from outside the UK and 70 per cent of food exports go to the EU, but he said the issue “doesn’t take away from an underlying view of huge opportunity for us over the coming years”.
Marc Crothall, chief executive officer at the Scottish Tourism Alliance, told committee members the workforce was the greatest challenge for tourism in the next decade.
He said: “Workforce without question, I think, is the number one concern that comes through from the majority.
“Of how do we get more people seeing tourism as a wider career of choice and there isn’t this perception of it as being something quite narrow and something you do if you fail at school.”
He urged a new approach to encourage people to see it as a career, starting by going into primary schools.