Seeing the sights: Scotland's tourism sector shows signs of recovery

On 4 March 2020 a group of agencies including the Scottish Tourism Alliance and VisitScotland unveiled a report that ambitiously predicted that, by 2030, Scotland would be “the leader in 21st century tourism”. With a foreword from then first minister Nicola Sturgeon, Scotland Outlook 2030 spoke of a sector that would enrich lives, protect places and help deliver Scotland’s wider economic strategy. Yes, Sturgeon wrote in her introduction, that vision was bold, but she believed there was “no country better equipped to rise to the challenge”.

But three weeks later, the UK entered its first coronavirus lockdown and the shutters were pulled down across the industry. The impact of that was immense, with a SPICe briefing published in March 2021 reporting that accommodation and food services were by far the worst impacted part of the Scottish economy, with GDP levels over 60 per cent lower at the end of 2020 than at the start, and rural areas bearing the brunt of the decline.

It is now over a year since the strictest of Scotland’s Covid restrictions were fully lifted and, with the World Health Organization declaring that coronavirus was no longer a global health emergency last month, things for the sector are starting to look up. Attractions such as Edinburgh Castle and Glasgow’s Burrell Collection have seen soaring visitor numbers, flights from the US to Scotland are reportedly booked up all summer and, with China finally relaxing its own Covid restrictions, direct flights bringing lucrative Chinese tourists have resumed for the first time in four years.

That does not mean the Scottish tourism industry is back to full strength, though. Indeed, Scottish Tourism Alliance chief executive Marc Crothall says the sector is “not fully recovered yet, by a long shot”, adding that across the industry the good news remains “patchy”.

“There are some businesses that are performing well but I put a caveat on that because in many cases where the media or politicians are saying things are better than in 2019 they are reporting revenue figures – those businesses are performing well because prices have gone up,” he says.

“That means the top line figure is very strong in a lot of cases but the harsh reality is that it’s not about the top line, it’s the bottom line that counts. There’s a lot of fragility out there still, particularly for independent operators, and that’s largely driven by excessive energy costs and food inflation as well as an increase in wages – the minimum real living wage has gone up and many are paying above that to recruit and retain staff. All of that has a bearing on a very tight bottom-line margin.”

Crothall stresses that it’s not all doom and gloom, with a recent report from 56 Degree Insight highlighting that the domestic travel market – which provided a lifeline to the industry during the period when international tourists couldn’t visiting the UK and Brits couldn’t travel abroad – is looking even more robust than it was at the beginning of this year. While the index released in January found “a great deal of uncertainty” around whether Scots would be taking a holiday this year, with only 35 per cent of those surveyed having booked at that stage, that had risen to 57 per cent by late April. “There are increases in the likely destinations of these holidays from January,” the report states, adding that “in the case of home holidays [there had been] a nine percentage points increase from 35 per cent to 44 per cent anticipating a Scottish staycation”.

One of the parts of the country set to benefit from both that trend and the influx of overseas visitors is the Highlands and Islands. Thanks to marketing initiatives like the North Coast 500 (NC500), the region is top of most holidaymakers’ must-visit lists, while the so-called Outlander effect has seen fans of the television show descend on the Highlands to visit filming locations such as Glencoe and the Highland Folk Museum. Anna Miller, head of tourism at Highlands and Islands Enterprise (HIE), says there’s a “sense of optimism” about this year’s tourist season, with a “strong pipeline of demand in place”.

“All in all the industry is feeling very buoyant about what this year will look like and there’s been a lot of discussion about bouncing back very strongly,” she says. “If we haven’t improved on where we were in 2019 we’re getting close to it. Appetite for Scotland remains very strong and a quarter of people responding to the tourism index said the Highlands and Islands would be their destination of choice.”

As is the case across the sector as a whole, recruitment remains an issue for tourism businesses operating in the Highlands, with employers having to factor in flexibility as well as pay levels when trying to attract staff. Another problem for the Highlands and Islands is that in some ways the region has been a victim of its own success. Prior to the pandemic some towns and villages along the NC500 were struggling to deal with the number of visitors the route has attracted in the absence of enhanced infrastructure along the way, while attractions such as the Fairy Pools on Skye became notorious for being over-run with tourists, traffic and litter. 

Miller says HIE is trying to avert that becoming a problem again by finding ways to “disperse” visitors from known hotspots by encouraging them to visit lesser-known attractions too. “We are so lucky that we have these icons that are so well recognised and in many ways we are so privileged, but it’s how we work with out communities and our destinations so the whole region can benefit,” she says.

At the other end of the country, the South of Scotland Destination Alliance (SSDA) is using the fact that the Scottish Borders and Dumfries and Galloway offer a much less saturated visitor experience to the Highlands and Islands as a selling point, with the region adopting the slogan ‘Scotland Starts Here’ to try to get this year’s tourists to stop off rather than just travel through the area.

“Last year Lonely Planet named the Scottish Borders as one of the best places in the world to visit and we’re using that to build confidence, to help us tell our story as a region and to change some mindsets,” says David Hope-Jones, chief executive of SSDA.

“The South of Scotland’s market share in terms of visitors remains low but we’re working with the travel trade to raise awareness of what we have to offer. We’re on the right side of the tracks around slow tourism and environmentally aware tourism, and we have lots of history – it’s about telling that story. The South of Scotland has a huge amount to offer and as other regions start to reach saturation the appetite for the south, with its freedom and fresh air, will grow – and we’re in the fortunate position of being able to learn from others. The North Coast 500 has been a fantastic marketing achievement in the sector but, however you measure it, it’s had a serious impact on communities and infrastructure. That’s a key learning point for us.”

Not everything is going to be plain sailing. Crothall warns that ongoing issues with ferry services are casting doubt over how strong the recovery in Scotland’s islands, where local economies rely on the boost tourism brings in the summer months, will be. “When you look at island destinations there’s strong demand, which is great, but there’s real frustration that you can’t get there because of inconsistencies in ferry resilience as well as a new ticket-booking system that is causing problems,” he says. “There’s a lot of reference to lifeline services but lifeline is also a business enterprise and tourism is a dominant part of that.”

At the same time, concerns have long been raised about the impact local tourist taxes, which are to finally become a reality after the Visitor Levy (Scotland) Bill was introduced last month, could have on visitor behaviour. Along with new legislation around short-term lets, which enables local authorities to put in specific controls around Airbnb-style lets – something only City of Edinburgh Council has so far taken advantage of – and from October will require all holiday rentals to be licensed, the bill has proved controversial.

The Association of Scottish Self-Caterers in particular has been a vocal opponent of the short-term let legislation, stressing that family-run B&Bs in remote areas should not be treated in the same way – or face the same cost burdens – as large-scale letting businesses in city-centre locations. Crothall, meanwhile, says the tourist levy is tricky in part because the fact it has been framed as a tax is “extremely damaging for Scotland’s reputation as a desirable tourist destination to domestic and international visitors”. Both he and VisitScotland chief executive Malcolm Roughead stress that, if the bill is passed, it is vital that all the money raised via levies is both locally controlled and ploughed back into the tourism sector.

With the bill only just lodged it is likely to be some time before the rules around visitor levies are ironed out, something that will create ongoing uncertainty in the sector. Yet despite that, and despite the challenges that remain post-Covid, Roughhead says there are still plenty of reasons to be optimistic.

“There is a real desire and demand for our world-class offering, particularly from important markets such as North America,” he says. “These visitors tend to stay longer and spend more, which helps support the visitor economy. Already this year we’ve seen the return of new direct air routes from the USA, Canada and China, which will make it easier for people to get to Scotland.

“In terms of experiences, Scotland is famous for its breathtaking scenery and rich culture and those assets attract visitors from across the globe. A particular highlight for this year is the 2023 UCI Cycling World Championships, taking place in Glasgow and across Scotland. An estimated one million spectators are projected to attend the biggest cycling event ever, while broadcast, media and social media coverage of the event will put our cycling tourism proposition front of mind with visitors. This summer we can also look forward to another great programme of music and cultural events including the world famous Edinburgh Festivals.  

“While it’s still a very challenging time for visitors and businesses due to the pressures of the cost of living and doing business, appetite to visit Scotland is strong. It’s in everyone’s interests that tourism recovers as the impact spreads far beyond the industry itself – it benefits our economy, our community and our wellbeing.”