Optimism in Scotland’s tourism sector was flying high in the third quarter boosted by the Commonwealth Games and the Ryder Cup, a new survey has revealed.
But the referendum on Scottish independence and eurozone difficulties caused overall sentiment to fall slightly on the prior quarter, although the survey by the Scottish Chambers of Commerce (SCC) indicated further expansion for the economy.
The SCC’s Quarterly Business Survey, in conjunction with the University of Strathclyde’s Fraser of Allander Institute, found that businesses surveyed indicated that employment trends remain promising and are expected to grow, as more firms reported increased levels of hiring.
Tourism firms reported an increase in capacity use compared with the same period last year, up from 74.8% to 77%, the survey found.
The survey targeted a range of sectors, across construction, financial & business services, manufacturing and retail & wholesale.
The construction sector and manufacturing sectors reported good performance but face ongoing challenges as both sectors experienced lower sales growth compared with the previous high performing quarter.
The retail/wholesale sector reported a decline in optimism although there were more firms expecting an increase in profitability in the year ahead for the first time in seven years of the survey.
Liz Cameron, Chief Executive of SCC, said:
“Scottish businesses have performed strongly throughout the year with positive indications of further expansion throughout the economy.
“However, a number of businesses had cited the referendum on Scotland’s future as a concern and the continued difficulties in the Eurozone and world economies present a challenge to business growth.
“International events such as the Commonwealth Games and the Ryder Cup boosted tourism performance with average room rates increasing for the sixth consecutive quarter.
“This boost does not seem to have been replicated in the retail & wholesale sector where more firms reported a fall in sales revenue than a rise: a trend that is expected to remain largely unchanged in the next quarter.
“It is important that Scotland builds upon the successes that the tourism industry has experienced in 2014 and this may be an opportune time for the UK Government to consider reducing the rate of VAT chargeable on accommodation, tourist attraction admission and restaurant services to 5%, in order to help our industry to compete on an even basis with other European nations.”