Tourism in Scotland: the economic contribution of the sector

Chapter 4: The Contribution of Tourism in Scotland

The Royal Edinburgh Military Tattoo fireworks display over Edinburgh Castle

4.1. Tourism is an important part of the Scottish Economy, and it makes a substantial contribution to Scotland’s economic performance.

The Direct Economic Contribution of Scotland’s Tourism Sector

4.2. The Sustainable Tourism Growth Sector is a significant source of employment within Scotland. In 2016, 207,000 people were employed in the sector, representing around 8 per cent of total employment ^[25] , or almost one in twelve people employed in Scotland. Although this represented a reduction of 15,000 jobs compared to 2015, employment in the sector has grown by 12 per cent, or 20,000 jobs, since 2011.

4.3. The sector’s GDP has also grown faster than the Scottish Economy in recent times. Scottish GDP data for the third quarter of 2017 ^[26] indicates that output in the Sustainable Tourism growth sector increased by 0.4 per cent and in year on year terms the sector’s output increased by 2.3 per cent, compared against growth of 0.2 per cent in the Scottish Economy overall during the quarter, and 0.6 per cent over the year.

4.4. Scotland’s tourism sector is larger than the Organisation for Economic Co-operation and Development ( OECD) averages in terms of employment and GDP ^[27] , but Scotland has a similar share of employment and GDP as those of several other OECD countries. In employment terms, the sector is of a similar relative size as those of Austria, France and New Zealand.

4.5. The sector also accounts for an important portion of Scotland’s exports, particularly with regard to services. Total exports from the Sustainable Tourism Growth Sector stood at £900 million in 2016, accounting for 2.4 per cent of Scotland’s total services exports, and for 1.2 per cent of Scotland’s total exports overall. Exports from the sector were 9.8 per cent down in real terms from their 2015 level.

4.6. Exports to the Rest of the UK ( RUK) stood at £570 million in 2016 and accounted for 63.2 per cent of total Sustainable Tourism exports. Exports to the Rest of the World (RoW) stood at £330 million and accounted for 36.8 per cent of total Sustainable Tourism exports ^[28] .

The Wider Economic Contribution of Tourism in Scotland

4.7. In addition to its direct contribution, the sustainable tourism sector also supports activity in other sectors of the Scottish Economy.

4.8. In 2016, total expenditure by domestic and non-domestic tourists in Scotland, including overnight and day visitors, was around £9.7 billion ^[29] . Analysis using the Scottish Government’s Input-Output model ^[30] indicates that, after adjusting for the imports purchased by the sector, and including an estimate of capital expenditure undertaken by the sector, this directly supported £4.3 billion of GDP (in basic prices) in the Scottish Economy, including around £3 billion in the hotels, distribution and catering sector.

4.9. However, this also supported activity in the wider Scottish Economy through the purchases made by the sector from the wider Scottish supply chain, and through the wages spent by those working in the sector. Purchases from the supply chain accounted for around £1 billion of GDP in the wider Scottish Economy, including around £350 million of GDP in Finance and Business Services. Wages spent by those working in the sector and the supply chain also supported a further £1 billion of GDP.

4.10. Taken together, spending by tourists in Scotland generated around £11 billion of economic activity in the wider Scottish supply chain and contributed around £6 billion to Scottish GDP (in basic prices). This represents about 5 per cent of total Scottish GDP.

4.11. This analysis also gives an indication of the impact on the wider economy of an increase in expenditure by visitors to Scotland. Each additional £100 million of spending by tourists is estimated to support around £65 million of GDP in the wider economy, when taking into account the direct effects, supply chain effects and re-spending of wages. These effects would mainly be seen within the food and beverage, retail and accommodation sectors, giving a sense of the contribution the sector makes to the wider economy in Scotland.

Infographic:

Infographic Text:
Tourism Contributes Around £6Bn Of GDP To The Scottish Economy, 5% Of The Total

The Wider Benefits of Tourism to the Economy, Communities and Regions

4.12. As well as its contribution to Scotland’s economy, the sustainable tourism sector also provides a number of wider benefits to Scotland. These include:

• Promoting Scotland on the Global Stage: Scotland’s profile as a tourism destination plays a significant role in shaping overseas perceptions. Conference delegates and holiday makers returning home spread the word about Scotland, its people and its tourism industry.
• Supporting Other Growth Sectors: attracting business visits through international conferences and meetings with strong alignment to Scotland’s key sectors helps showcase Scottish companies and Scottish products, supporting other growth sectors in the Scottish Economy.
• Supporting Community Sustainability: Additional spend from visitors supports many community facilities, such as shops, cafes, pubs and village halls, and in some cases helping them to remain open during the quieter times for locals and visitors alike.
• Providing Flexible Employment and Career Opportunities: The sector employs people of all ages, abilities, skill sets and nationalities. It is an inclusive and flexible industry with a low barrier to entry. There are many employability programmes focussed on priority groups, such as young offenders, ‘back to work’ and our young people. All of these mean that tourism is an industry that can make an important contribution to inclusive growth in Scotland.
• Supporting Scottish Culture and The Arts:
  From major sporting events, music festivals and our theatres to Highland Games, other traditional events and local museums, heritage and culture is for many the main reason for visiting Scotland. It supports Scotland’s musicians and artists, presenting Scotland as an open and contemporary society.

4.13. Taken together, these highlight the important contribution that tourism makes to Scotland’s economy and society.