Half of bed and breakfast businesses in the south of Scotland say they may be forced to close because of rising costs.

They are among one in four (27%) tourism and hospitality establishments in the region warning that they face shutting down as soaring bills add to falling consumer confidence and visitor numbers, both domestic and international.

One operator described the cost of living crisis as “much, much bigger than Covid as a risk to business survival and growth”.

Research by the South of Scotland Destination Alliance (SSDA) shows that more than 70% are neutral or optimistic about their trading and turnover prospects over the next two years.

But there is widespread and growing concern among many tourism and hospitality businesses in the region, who face increasing challenges to “keep the lights on” as costs and inflation soar and consumer confidence dips.  

The vast majority of self-caterers and B&Bs expressed serious concerns about the impact of forthcoming short-term let licence requirements on their business, with two thirds of self-caterers in favour of the legislation being paused.

SSDA’s Interim chief executive Melanie Allen said: “It’s quite stark to note that a really significant proportion of regional businesses fear they may have to shut their doors for good given the exceptionally challenging economic climate we’re in just now.

“I will shortly be writing to MSPs on behalf of the SSDA, setting out the immediate and medium-term priorities and needs of the tourism and hospitality sectors in the south of Scotland, to inform their budget-setting and decision-making into 2023.”

Marc Crothall, chief executive of the Scottish Tourism Alliance, said: “Businesses across the sector are feeling the acute impact of the current economic challenges and are simply unable to deliver the service they would wish to.  Many are closing or part closing, as the survey indicates.

“I know the economic landscape will be the focus of many conversations with the 20+ MSPs who are attending the Tourism Industry Conference evening reception at the EICC on 9 November.”

Survey highlights:

• More than a quarter (27%) of businesses say they may have to close permanently due to the current climate, including 50% of B&Bs
• Rising energy, fuel and insurance costs are having the biggest impact on businesses, along with falling consumer confidence and below pre-Covid visitor numbers, both domestic and international
• Over 50% of the respondents feel neutral or pessimistic about their businesses performance for the next 3 – 6 months, however more than two thirds (70%+) report feeling neutral or optimistic regarding the next 12 – 24 months
• 85% of B&Bs say STL licensing will have a high impact on their business
• 65% of self-caterers say putting a hold on STL Licensing legislation would be highly significant to their business
• Businesses cite concerns about rates and VAT returning to normal levels despite them still being in ‘recovery mode’; those surveyed stated a freeze or reduction on those would have the biggest impact on their business
• Feedback from those operating at lower capacity indicated staffing shortages and thecost of living crisis as reasons for lower trade
• overwhelming priorities for the next 3-6 months are monitoring cashflow (78%), reducing overheads (68%) alongside a priority to focus on marketing (69%), actively working to become more sustainable (64%) and collaborations (63%)