More than half of tourism and hospitality businesses remain in survival mode and do not have enough cash reserves for the next quarter, according to a new survey.

A majority (60%) of respondents told the Scottish Tourism Alliance they want the Scottish Government to delay introducing and progressing new regulations until the economy recovers.

Almost four in ten said current domestic bookings for June to September this year are lower compared to the same period in 2022 and only 1% is ready to expand.

Nearly half (49%) said they do not support the introduction of a visitor levy and a quarter of those that do, only do so only if the net revenue raised is ‘used solely for tourism investment and enhancement’. 

Despite the downbeat responses, more than half of businesses (51%) are reporting that they feel ‘fairly’ or ‘very pessimistic’ about the outlook for their business.

Staffing problems have also eased with 64% of businesses saying they are operating with the level of staff they need to operate effectively. 

Other reports from the industry suggest a stronger recovery with customers prioritising holidays, and restaurants continuing to open, particularly in hotspots such as Edinburgh.

Marc Crothall, STA chief executive said the big danger for the industry is new regulation which will impose additional challenges.

“There has been a strong response to the survey, particularly from the self-catering sector which reflects the current climate of concern around the impacts of proposed legislation,” he said.

“It is also clear from respondents across other sectors that businesses continue to experience significant challenges. However, pleasingly, there is an increase in customer demand and subsequently, a renewed feeling of optimism within sector.

“The reality is that healthy trading is all about the bottom-line performance of the business; while revenue may be strong for many businesses, the key to commercial success lies in the ability of that business to convert profit into sustainable recovery and growth.”

More than 540 tourism businesses took part in the survey held between 24 May and 14 June, with responses coming from all 32 of Scotland’s local authority areas and 21 core industry sub-sectors of the tourism industry, predominantly self-catering, bed & breakfast/guest houses, hotels, bars and restaurants, visitor attractions and tour operators.