More than half of tourism and hospitality businesses in Scotland have no cash reserves or fewer than three months’ reserves, new research reveals.
Highlighting a growing financial vulnerability across the sector, the report by the Scottish Tourism Alliance found cost inflation is the dominant pressure, with the majority of businesses reporting higher costs for suppliers, energy and staffing compared to 2024.
Visitor numbers and spend is contributing to the financial issues. Visitor spend in Scotland fell by 15% during summer 2025, while profitability declined by 23%. Domestic visitor numbers also fell sharply, showing a net decrease of 26% year on year, contributing to an overall net decrease in visitor numbers of 18%.
Only a quarter of businesses plan to invest and expand during 2026, the study said, with the recent Scottish Budget viewed negatively by 68% of respondents.
Ahead of the Scottish parliament elections in May, almost four in five said they have little or no trust in elected MSPs to deliver for the tourism and hospitality sector.
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.
“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.”