• Spending review raises concerns for sector

The fall-out from the government's spending review was a topic for conversation with delegates at this year's British Association of Hospitality Accountants conference.

As the new year approaches and the cuts are due to start being felt by the hospitality sector, combined with the increase in VAT, the impact on the UK and on the capital in particular was assessed.

Looking forward to next year, Liz Hall, head of research for hotels and leisure at PricewaterhouseCoopers, said: "It's pain today, it's pain tomorrow and there's not much mention of jam."

Stephen Broome, director at PricewaterhouseCoopers, added: "The public sector cuts will clearly hurt. We believe that London hotels will not see a fall-out in 2011, revpar growth will continue in 2012, albeit with a different business mix."

Also speaking at the conference, British Hospitality Association CEO Ufi Ibrahim maintained the group's call for VAT cuts for the hospitality sector, imitating those in all but four other EU countries.

"Our members completely understand the need to be able to tackle this huge deficit that we have. But the UK will stand to lose incredible levels of competitiveness when the VAT levels go up to 20%," Ibrahim said.

She added: "Hospitality is one of the fastest ways of achieving the coalition government's goals of regeneration, rebalancing and spreading growth across the UK. We want to say here is an industry that can lead that."

Ibrahim said that, while it was understood that the VAT increase was necessary for the wider economy, the government should be prepared to reverse it as soon as was viable.

Post-conference, the BHA has also expressed concerns about cuts in funding to VisitLondon. Ibrahim said in a letter to London Mayor, Boris Johnson and business secretary, Vince Cable: "The result of the withdrawal of LDA's £12m annual funding is that VisitLondon faces closure – just at the time when the 2012 Olympic Games are nearly upon us," says Ufi Ibrahim, BHA's chief executive.

The letter, which is also signed by Ciaran Fahy, chairman of BHA London and managing director of the Cavendish Hotel, pointed out that VisitLondon delivered not only leisure visitors in large numbers but also produces significant conference and related business.

Fahy added: "We are therefore very concerned that funding to promote London is in danger of ceasing altogether in March next year, not least with the Olympics fast approaching.

"Without a tourist board, London will lose out badly as a world tourism destination in the coming years."

Ibrahim said that London, the gateway for three-quarters of all visits to the UK, generated over £16bn in tourism revenue, while BHA's own research showed that the hospitality industry alone employed over 400,000 people in the capital. VisitLondon's work was estimated to generate an additional £300m in tourism revenue at a total cost of £12m of public funding and £6m in private investment.

"To put all that revenue in jeopardy just doesn't make sense," she said.

Ibrahim pointed out that concerns about the future of VisitLondon were reflected in doubts about the survival of tourist agencies throughout England, many of which are funded by Regional Development Agencies, which are to be scrapped.

"We believe that the new Local Enterprise Partnerships are a key to promoting tourism in local areas and regions, and we must continue to hammer home the need for support for tourism in areas where it is the main economic driver. There is the danger that tourism goes by default – we must not let that happen."

 

HA Perspective: There is always a danger with lobbyists that they see their own interests as integral to the interests of the industry they are lobbying on behalf of. It is not the case. And it is not the case either that the survival of tourist boards are vital for the survival of the hotel industry.

There is no question that it is unhelpful that money is being sucked out of tourist promotion. But sensible deregulation and lower taxes will do far more for the tourist industry than the tourist boards ever have.

Provided there is some form of coherent national tourism promotion overseas, the loss of regional agencies competing with each other for the same domestic tourists is not likely to have a major impact.

And by focusing on coming to Britain, rather than just London or any other regional city, one could argue that a wider and deeper offer is being promoted.

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