Scotland tourism: Budget falls short, rate fears rise

Marc Crothall MBE, chief executive of the Scottish Tourism Alliance (STA), said that while the Budget acknowledged the “intense pressure” facing tourism and hospitality, the level of transitional relief announced “falls way short of what is needed now” to stabilise the sector.

In the run-up to the Budget, tourism bodies, business groups and chambers of commerce had urged ministers to act decisively on non-domestic rates, warning that failure to do so could push many firms to the brink. Although the Scottish Government has introduced relief, reduced basic and intermediate rates and offered 15% non-domestic rates relief for retail, hospitality and leisure businesses, the STA argues these measures are only temporary.

Crothall said the package would provide “breathing space for some, but not nearly enough to prevent potential closures and job losses”, adding that relief is capped and time-limited, and does not address the wider volatility created by revaluation or the cumulative impact of rising operating costs.

The continuation of the Small Business Bonus Scheme and full relief for businesses on islands and designated remote areas has been welcomed. However, the STA maintains that the scale of support does not reflect the seriousness of the challenges facing operators across Scotland.

According to recent STA research, more than 70% of tourism businesses expect trading conditions to worsen. Nearly half are delaying or cancelling investment plans, and 15% anticipate making redundancies within months. Many have already reduced costs as far as possible, leaving little room to absorb further financial pressure.

Crothall warned that businesses now face difficult choices. Some may attempt to increase prices at a time when consumer spending remains tight, which in turn raises expectations around quality and service at a moment when investment capacity is constrained.

The Budget also included additional funding for VisitScotland, support for the Rural Tourism Infrastructure Fund, and continued backing for major cultural and sporting events. While the STA recognises the value of this investment in promoting destinations and boosting short-term demand, it argues that it does not tackle the core issues of cost, competitiveness and long-term viability for businesses on the ground.

The warning follows growing concern over business rates revaluations due to take effect from April 2026, which have already prompted fears of campsite closures in some parts of Scotland. Industry representatives say that without deeper reform, uncertainty will continue to weigh heavily on investment and employment.