More than half of Scotland’s tourism and hospitality businesses have little or no financial buffer, according to the latest Tourism and Hospitality Business Barometer from the Scottish Tourism Alliance.
The survey, carried out with research partner 56 Degree Insight, gathered responses from 239 businesses across Scotland and points to a fragile outlook for the sector, with rising costs, falling visitor spend and low business confidence continuing to weigh on operators.
It found that 53% of businesses had no cash reserves or less than three months’ reserves, while visitor spend fell by 15% during summer 2025 and profitability dropped by 23%. Domestic visitor numbers were also down, with a net year-on-year fall of 26%.
Cost inflation remains a major pressure point, with 86% of respondents reporting higher supplier costs than in 2024, 82% reporting higher energy costs and 54% higher staffing costs.
Business confidence also remains subdued, with 52% of businesses reporting low confidence for the year ahead. Only 24% said they planned to invest and expand in 2026.
The survey also highlighted frustration with the current policy environment. More than two-thirds of respondents viewed the recent Scottish Budget negatively, while 79% said they had little or no trust in elected MSPs to deliver for the sector.
The findings were presented at the Scottish Tourism Alliance Signature Conference in Edinburgh, where representatives from six political parties took part in a pre-election hustings ahead of the Scottish Parliament elections in May.
Marc Crothall, Chief Executive of the Scottish Tourism Alliance, said, “Scotland’s tourism and hospitality sector is resilient, but these findings show many businesses are now operating with very limited financial headroom. Rising operating costs, alongside continued concerns around non-domestic rates revaluation, are placing significant pressure on businesses across the sector. Many operators are now forced to act defensively rather than expansively, unable to invest in their people, their product and the places that create Scotland’s world-class visitor experiences.”
“The industry does not lack ambition. The aspiration to grow is very much still there, and there is frustration that businesses are unable to unlock their potential. The STA Holyrood Election Manifesto highlights what the sector can achieve with the right policies in place – that and today’s research findings have provided the basis for today’s political party debate.”
“As Scotland approaches the next Scottish Parliament election, it is vital that tourism and hospitality are recognised as core drivers of economic growth. The sector supports hundreds of thousands of jobs and plays a crucial role in communities across Scotland.”
“The next Scottish Government must work in genuine partnership with industry to address cost pressures, reform the business rates system and create the conditions that allow businesses to invest, grow and continue delivering world-class visitor experiences.”
Jim Eccleston, Managing Partner at 56 Degree Insight and report author, said, “The study findings paint a picture of a sector that remains resilient but is operating under sustained pressure. While many tourism businesses remain profitable, declining visitor spend, rising operating costs and limited financial reserves mean the sector is increasingly fragile. As Scotland approaches the 2026 election, businesses are looking for clear action, particularly around business rates reform and reducing regulatory burdens, to restore confidence and unlock future investment.”
