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November 13, 2023

SkyeConnect Survey Reveals Business Costs in Tourism Sector are Hampering Profitability

Rising costs have hit the profitability the majority of tourism business on Skye, despite the increased visitor numbers and turnover during the 2023 season.

The majority of tourism business on Skye saw increased visitor numbers and an increase in turnover during the 2023 season. Westbound traffic on the Skye Bridge saw an increase of 20% compared to 2021 with 815,617 vehicle movements. However, despite the increasing number of visitors, rising costs have hit the profitability of businesses with half of those surveyed reporting costs have increased by more than 20%.

These are just some of the findings of the annual ‘End of season’ survey conducted by Destination Management Organisation, SkyeConnect. The survey was sent to business across Skye at the beginning of November. 82 businesses responded with 70% representing the self-catering/B+B sectors and just under 20% representing the Hotel/Restaurant/Café sector. 

72% of respondents have a turnover of under £100,000 with 17% reporting a turnover in excess of £250,000.

82% of respondents reported visitor numbers either the same or up on last year with five businesses seeing a 25% increase in visitor numbers. This is borne out by traffic sensor date on the Skye bridge which shows a 20% increase in westbound vehicle movements compared to 2021 and a 38% increase in westbound journeys compared to 2019.

83% of respondents to the survey reported turnover was the same or up on last year, but nine out of ten reported an increase in costs year on year.

Attracting and retaining staff has been a major issue for the industry post Brexit and the pandemic.  However, three quarters of respondents said they had a full complement of staff this year but the larger employers representing hotels, restaurants and cafés are still struggling with the majority reporting that they have been operating this year with only 75% of the staff they need.

Businesses were asked their intentions for the winter months with half staying open and half closing. Those that are staying open say demand is good for November and December but more than half of those surveyed report poor or non-existent demand for January and February.

Respondents were asked to list the top three challenges facing their business with costs, servicing debt, staffing, staff accommodation, short stays, too much focus on Portree and North east Skye, and business regulation being the most frequently cited challenges.

Three-quarters of respondents believe the Scottish Government does not understand the needs business and in particular the needs of the tourism sector.

When asked to prioritise Government and other public agencies activity and spending, the majority listed roads and infrastructure. Other priorities included promoting Skye in Europe and encouraging the UK market to stay longer with many businesses advocating a minimum-night-stay policy.

Executive Chair of SkyeConnect, Gary Curley, says the results of the survey – which were revealed at the organisation’s Conference and AGM at An Crùbh on Tuesday – confirm what he has been hearing anecdotally all year.

“We know how much emphasis Governments and public bodies place on the importance of hard data. Our annual ‘end of season’ survey provides that data and enables SkyeConnect to focus our lobbying activity through the winter months and into the 2024 season.  There is no doubt that our sector faces the twin challenges of rising costs and an on-going lack of staff to provide the service that our visitors expect. We also know that we need urgent investment in our roads, infrastructure and housing otherwise the global reputation of Skye as a world-leading destination could soon become tarnished and our economy may suffer.”

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