19 Jan Hotels struggling with business interruption oppose VAT move

Hotels struggling with business interruption oppose VAT move

The owners and managers of London’s leading hotels, already struggling for survival as a result of the coronavirus global health pandemic, have expressed concern that they could suffer further losses as a result of chancellor Rishi Sunak’s plans to introduce a so-called “tourist tax”.

The move, which would see non-EU tourists lose their exemption from having to pay 20% VAT, would only add further pressure to a sector already facing serious financial questions, including the current delays in receiving full business interruption insurance payouts on their hotel business insurance policies.

Fears that EU tourists will stay away

Legendary hotelier Sir Rocco Forte has said that the VAT move could cause many tourists to stay away from the UK, potentially jeopardising thousands of jobs in the industry. As such, Forte has joined forces with nine of the capital’s leading hotels, including Rosewood London, Claridge’s and the Connaught to abandon the proposal, which will see Britain the only country in Europe not to provide non-EU tourists with tax-free goods and services.

The hoteliers say that hotels in cities such as Paris, Milan and Barcelona will not have the same pressure and that London hotels are going to struggle to compete at a time when they are already reeling from the coronavirus restrictions on trade and travel, and while they are still trying to establish the value and scope of their business interruption claims.

Michael Bonsor, Rosewood London’s managing director, told press that when prices go up, prices will effectively rise by 20% for tourists, it drives away customers and this is likely to hurt the people in a tourism industry that is already saddled with uncertainties over Covid-19 restrictions and whether it can survive.

Hospitality already hit hard by Covid

The UK hospitality industry as a whole has already been hit hard by the coronavirus pandemic and unemployment data released in December 2020 showed that one in three job losses in the UK had come from the hospitality industry.

Hotels, restaurants and bars are struggling to come to grips with unprecedented business interruption at a time when they must continue to pay overheads such as rent, hotel business insurance and, where possible, staff wages.

So the introduction of a tourist tax which could jeopardise the likelihood of seeing holidaymakers return is only likely to make the future for certain parts of the industry even more prone to breakdown.