Tourism sector ‘gazing over a cliff’, expert warns

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Scotland’s tourism industry is “gazing over a cliff”, an expert has warned, with an “acute” shortage of migrant workers just one of the problems the sector is facing.

Professor John Lennon, director of the Moffat centre for travel and tourism business development at Glasgow Caledonian University, said rising food price inflation could force many operators to increase charges.

Such a move could hit business from so-called “staycationers”, with many across the UK seeing their budgets squeezed as a result of low wage growth and increases in the cost of living.

As a result, Prof Lennon warned of more businesses in the tourism sector “going to the wall” in the coming months.

Prof Lennon said Scotland’s tourism industry had been “performing incredibly well”, partly as a result of the drop in the pound post-Brexit making the industry more competitive.

He said: ” Tourism in Scotland, and indeed across the UK, has made gains from the big decline in the value of sterling against major currencies.

“The UK is far more affordable to many tourists from key international markets than it was before the Brexit vote.”

Despite this, the expert added: “My strong impression is that the Scottish industry is gazing over a cliff.”

In an article on The Conversation website, which highlights work by the academic and research community, he stated: ” Scotland, like the UK as a whole, is a net importer of foods.

“Hoteliers and food and beverage operators are going to have to move their prices up because their margins are going to be attacked.

“Talk to anyone in the hospitality world at the moment and they will tell you about food price inflation already well in excess of the 4% to 5% reported.

“The time has to be coming when tourists will find the pound in their pocket going less far.

“Many international visitors will be able to take the price hike. Many domestic tourists will not because they are being squeezed in two ways: low wage growth and gathering inflation at the same time.

“What does this mean? As we move through January, February, March, expect to see more liquidations in the tourism industry; more businesses going to the wall, particularly the highly leveraged ones.”

He added: “Another issue is labour: Scottish tourism and hospitality relies on a supply of migrant workers and the country is already bleeding EU nationals.

“The availability of labour working in the sector is becoming acute and will continue into 2018.”

To help tackle the problems the industry is facing, he suggested Scotland’s two largest cities work together to try to spread the benefits from tourism across the central belt.

Prof Lennon said: ” Rover rail tickets allowing unlimited rail travel between Edinburgh and Glasgow would be a good idea, as would co-operation on accommodation supply and transport during the Festival and Hogmanay.

“There is also an argument for spinning these out to places like the Borders, which hasn’t enjoyed the same type of success.”

The Moffat centre is the UK’s largest university-based consultancy and research centre for tourism and travel market research and business development.

Tourism Secretary Fiona Hyslop said: ” Scotland’s tourism industry has been performing well but this report confirms that Brexit poses a clear and present danger to one of Scotland’s most important sectors.

“As we get closer to the UK’s departure from the EU, it is clear that there is a great deal at stake for every business, whether it’s an increase in operating prices or access to talent.

“We recognise the valuable contribution that EU nationals make, particularly within the hospitality industry – 17% of people employed in the tourism growth sector are of EU nationality.

“The Scottish Government’s position is clear – it is imperative Scotland stays in the single market and continues to benefit from the free movement of persons, enabling businesses to recruit and retain the staff which will stimulate economic growth.”