The Scottish hospitality sector is facing exceptionally severe financial pressure, with business leaders reporting that customers are sharing food and drink to save money and businesses struggling to stay afloat.
Industry representatives have described the first half of the year as “brutal,” citing a dramatic drop in domestic tourism and only partial relief from American visitors, who are spending less time but still contributing to the local economy.
Many pubs and restaurants are desperate, and the bottom line for most businesses is unhealthy, with some reporting minimal profit or significant cash losses.
The upcoming Center Parcs development in the Scottish Borders, expected to transform local communities and create 1,200 jobs with a £400m investment, faces workforce challenges.
Without increased investment in skills and staff training, jobs may have to be filled by workers from England due to local shortages, especially after the decline in the textiles industry.
Employer national insurance contribution hikes have delivered a critical blow to hospitality businesses, causing job losses and further economic instability.
Sector leaders are urging the UK and Scottish governments to reverse these changes and offer meaningful support, such as fairer business rates.
Plans to introduce a 5% accommodation cost visitor levy in Edinburgh have raised concerns about additional financial burdens for guests and businesses.
Leon Thompson, executive director of UKHospitality Scotland, said: “Hospitality businesses are being completely squeezed from top to bottom at the moment”.
He described the hike in NICs as “a real hammer-blow for our businesses”, adding the sector is “haemorrhaging jobs”.
Mr Thompson said reversing this would help “stabilise” businesses, but also demanded “meaningful support” from the Scottish Government on business rates.
“At the moment it’s really difficult times out there for businesses.
“I was talking to one business that said they had made £600 profit in the last year. Others are making nothing at all and are simply haemorrhaging cash.”
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While similar schemes exist in Europe, Scottish industry leaders argue that the country does not experience “over-tourism,” even in busy cities like Edinburgh, highlighting a need for balanced policy decisions.
The Scottish hospitality industry urgently needs targeted government support to address falling visitor numbers, workplace shortages, and financial hardship, amid fears of further decline without intervention.
