Scotland: More than one in four hospitality and tourism jobs are at risk in Scotland according to a new report from academics at the University of Edinburgh Business School and credit risk assessment company Wiserfunding.
The financial statements of 5,000 Scottish companies operating in the tourism and hospitality sectors were surveyed in the report, which concluded that 28 per cent of those companies would default under a “mild stress” scenario, similar to the 2008 crash.
As a result, this places more than 58,500 jobs at risk. In total, the 5,000 companies surveyed employ 209,000 people.
Under a more severe scenario, for example a second lockdown, it is estimated that 43 per cent of companies would default, leading to just under 90,000 job losses.
Dr Galina Andreeva, senior lecturer in management science at the University of Edinburgh Business School, said: “We hope that the results of our study will be useful to governments and business managers to decide where to focus support during the next phase.
“Our results confirm that the current government efforts to support the sector are going in the right direction,” she continued. “However, we would recommend support tailored to company size to maximise impact. Firms that show the highest level of adaptability should be rewarded and offered additional support to overcome the crisis, in order to increase the chances of success in the deployment of public funds.”
The report found that medium and large companies were more at risk of defaulting, for reasons that smaller businesses have lower fixed costs and can therefore adjust quicker to challenging situations.
Andreeva added: “The withdrawal of current borrowing schemes should be carefully planned in order not to create additional shocks to companies with high debt levels.”