Current status: Answered by Richard Lochhead on 16 September 2024
To ask the Scottish Government what economic assessment it has made of the recovery of the hospitality sector since the COVID-19 pandemic.
Latest data shows that both output and employment in the hospitality sector are above pre-pandemic levels. However, the sector continues to face challenges related to rising costs, squeezed household budgets and staff shortages. Whilst cost rises and recruitment difficulties have eased somewhat over the last 12 months, the sector remains more impacted than the economy overall. These challenges appear to be affecting business viability, with insolvencies and business closures in the sector rising over the past two years. However, the insolvency rate in the sector remains lower than that in the rest of Great Britain and the business closure rate remains lower than in the UK as a whole and is broadly in-line with the pre-pandemic period. The total number of businesses in the sector is growing modestly, with business births marginally exceeding closures.
The Scottish Government’s Evaluation of COVID-19 Business Support Measures in Scotland, published in June 2022, found that the Accommodation and Food Services sector had the highest proportion of firms receiving support from Scottish Government grants out of all sectors and was also one of the sectors that benefited most from the support provided by the Scottish and UK Governments, in terms of the proportion of businesses reporting that the support helped them continue trading.
The forthcoming Fair Work Convention Hospitality Inquiry Report, which will be published on 24 September 2024, includes a high-level assessment of the recovery of the hospitality sector since the pandemic and subsequent cost crisis as underpinning evidence for its more detailed assessment of fair work within the sector.
The Scottish Government wants a strong and high value hospitality sector in Scotland. We will do all we can to support businesses to be successful and resilient and will continue to engage directly with the sector, to monitor evolving impacts of the ongoing cost crisis, and to work with the UK Government to support Scottish businesses. The 2024-25 Scottish Budget delivers a competitive non-domestic rates regime with the lowest poundage in the UK for the sixth year in a row, and a package of reliefs worth an estimated £685 million, including the Small Business Bonus Scheme which continues to be the most generous relief of its kind in the UK. We estimate around half the properties in the retail, hospitality and leisure sectors are eligible for 100% Small Business Bonus Scheme relief in 2024-25.