SCOTLAND'S tourist industry is facing an economic crisis as new figures reveal the market has barely grown in ten years.

Growth in the hotel and catering market has been stagnant since 1998, while the industry in England has boomed.

Figures compiled by Glasgow and Strathclyde University economists at the Centre For Public Policy for Regions (CPPR) show Scotland is being outstripped by its southern neighbour, where growth has increased by nearly 40 per cent in the past decade.

The statistics will make grim reading for the Visit Scotland's national tourist agency, which has thrown millions of pounds at schemes to attract people to stay in Scotland's hotels and eat in the country's restaurants.

The poor level of financial growth. (less than 3 per cent.) is revealed through an analysis of the Scottish Executive's own statistics and casts doubt on VisitScotland's goal of increasing turnover from £4.1 billion to £6.2 billion by 2015.

The figures also undermine the Executive's objective of matching the UK's level of overall growth by 2011.

But last night VisitScotland refused to accept the findings, claiming the industry was stronger than ever. A spokesman said: 'This report does not reflect the full picture of the health of Scottish tourism. Scotland's hotels have been performing well, experiencing the highest ever level of room occupancy last year.

But the CPPF report paints a grimmer picture, with economist John McLarin stating: 'If an independent Scotland was to depend on tourism as a prime source for pushing up Scotland's growth rate, then the current position looks uninspiring. Hotels and restaurants have been flatlining for a decade now. The erratic performance of Scotland's hotels and catering sector remains a mystery.'

The figures show that while England and Wales have enjoyed growth of 38 per cent since 1998, Scotland's hotel and catering industry has grown by only 2.3 per cent.

This means that although Scotland was in a stronger position than England ten years ago, growth in the hotel and catering market north of the Border fell behind in 2005.

Last night Conservative tourism spokesman Gavin Brown said that much would need to he done to correct the imbalance, with improvements in planning regulations needed to help the hotel sector grow.

He also called on training for hotel staff to be standardised to ensure levels of service were replicated across the country.

Mr Brown added: 'We can't compete on price with some of the cheaper destinations, so we have to compete on quality.

'People are getting used to visiting places such as Dubai where they are treated like kings. We have to match that.'

A VisitScotland spokesman said: 'Scotland's tourism industry is much broader than just hotel and catering and it is important to consider other sectors, such as visitor attractions."

This article came from the "Mail on Sunday".