Hospitality sector appeals for help amid ‘brutal' trading conditions
The Scottish Licensed Trade Association (SLTA) said the results of its August market insight survey report were 'the most negative we have seen' in the 10 years it has been carrying out the study.
Research by the body, which represents publicans, hoteliers, restaurateurs, late night entertainment venues and clubs, found that in three quarters (75%) of venues profitability was down from last year, with 56% of firms saying this had dropped by more than 10%.
More than half (56%) of outlets said they expected trading performance to decline in 2025, with 14% of outlets either planning to close their doors or seriously considering it.
This is more than double the 6% who were either planning or considering closure in the SLTA's January survey.
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Cost pressures continue to have a major impact on the sector, with 67% of outlets reporting increases of more than 10%.
Meanwhile almost 90% of outlets said they expect the Scottish economy to decline this year.
According to the SLTA research, increases in employers' national insurance contributions have impacted upon staffing and opening hours, with nearly a third (32%) of outlets cutting staffing levels, while almost a fifth (19%) reduced their opening hours.
More than 350 pubs, bars, restaurants and hotels across Scotland took part in the survey, and in the wake of the 'extremely concerning' findings, SLTA managing director Colin Wilkinson called for action from both Holyrood and Westminster to help the sector.
He said: 'We've spoken repeatedly about the many challenges Scotland's licensed hospitality sector continues to face.
More than 350 pubs, bars, restaurants and hotels across Scotland took part in the survey (Image: Pixabay) 'In recent years, it navigated the stormy waters of Brexit, the Covid pandemic, rising utility bills, and the ongoing cost-of-living pressures that have impacted on businesses' operating costs and consumer spending.
'However, in the 10 years that we have been conducting our market insight surveys, these findings are the most negative we have seen – these insights are extremely concerning and the only word to describe the current trading conditions is 'brutal'.'
Mr Wilkinson said that 'spiralling costs to businesses from the Chancellor's hike in employers' NICs', along with increases in the both the national minimum wage and the living wage are 'having a devastating impact on Scotland's pubs, bars, hotels and hospitality venues'.
Meanwhile, low consumer confidence is leading to lower income for the sector, he added, as he appealed to the Scottish and UK governments to 'work to support one of our key industries'.
Mr Wilkinson said: 'The most effective way to achieve this is by reducing VAT in the licensed hospitality sector and an urgent review of the commercial rating system in Scotland.'
The survey found 75% of businesses in the sector want the next Scottish Government after the 2026 Holyrood elections to address rates discrepancies with the rest of the UK.
Mr Wilkinson insisted: 'It is more important than ever that the Scottish Government finally accepts that hospitality is one of Scotland's key industries and plays a crucial role in tourism, economic prosperity and employment.'
Scottish Conservative business spokesperson Murdo Fraser said the survey results were 'deeply alarming figures' and a 'brutal indication of how Scotland's hospitality sector is being failed by two high-tax, left-wing governments'.
The Tory MSP stated: 'The SNP's refusal to pass on rates relief available in England is hammering businesses here, while Labour's national insurance hikes are squeezing the life out of pubs, bars and restaurants across the UK.'
Mr Fraser insisted: 'Pubs and restaurants are not only crucial to our economy, they are the focal point of communities up and down the country – and we can't afford to lose them.'
Business minister Richard Lochhead defended the current rates system, as he urged the UK Government to 'reverse its decision to increase employers' national insurance contributions, which is having a detrimental impact on the hospitality industry'.
Speaking for Scottish Government, Mr Lochhead added: 'We are providing 40% rates relief in 2025-26 for hospitality premises, including music venues with a capacity of up to 1,500 people, which is benefiting night-time businesses.
'Scotland also continues to offer the most generous small business rates relief in the UK, with around half of properties in the retail, hospitality and leisure sectors being eligible for 100% Small Business Bonus Scheme relief.'
Meanwhile a spokesperson for HM Treasury said: 'UK business confidence is the highest in 10 years according to a Lloyds Bank survey published only this week.
'Since the election, we have struck three major trade deals with the EU, US and India, more than a billion pounds has been invested to fix our national infrastructure and the Bank of England has cut interest rates four times.
'Because of the tax decisions we took at the Budget last year, we have been able to deliver on the priorities of the British people, including funding the record £50.9 billion settlement for Scotland to support public services including health, transport and education as we deliver on the Plan for Change.'
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