Britain’s hard pressed tourism industry enters the New Year facing a triple whammy, according to industry experts, thanks mainly to the current government’s failure to understand the important export industry.
As dozens of hotels, B&Bs and attractions slowly recover from last year’s battering from floods and gales and a downturn in tourism, three storm clouds are heading their way which will reduce the relative attractiveness of UK destinations to foreign and UK visitors alike. The first is the euro's weakness, where clients can now buy one euro for just over 78p compared to 84p last March, making the continent cheaper by 7%. Experts predict that this will lead to a huge rush to book holidays in Europe and further afield by thousands of British families, resulting in a devastating effect on many struggling UK tourist companies and resorts.
The second is Air Passenger Duty (APD), where rates for children travelling abroad is set to be abolished from May. Experts say that while reducing barriers on tourism is positive, this will, unfortunately, harm Britain’s competitiveness and ultimately encourage more families to take short stays and summer holidays on the continent, without an equivalent benefit for those staying in the UK.
Finally, VAT rates in Britain for accommodation and attractions continue to be three times that of Belgium, Greece, Netherlands and Portugal, and twice that of France and Germany, making it more difficult for hard-working families to be able to afford a holiday in the UK.
Tourism is the UK’s sixth largest export-earner, generating more than £20billion from overseas visitors each year, but is the only export sector to pay the high VAT tax of 20%. Out of the 28 EU member states, only three (including Britain) do not take advantage of the reduced rate of VAT on visitor accommodation and visitor attractions.
Cut Tourism VAT is campaigning for 5% VAT so that UK tourism can compete more strongly with other EU countries that have already reduced VAT for tourism. The campaign is supported by more than 43,000 businesses and 35 major tourism and hotel groups across the tourism industry which employs 3.1 million people. More than 100 MPs are also now publicly supporting the campaign.
Dermot King, managing director of Butlins, said: “Unfortunately, the government’s new measures on APD have created an anomaly whereby families who go abroad get a new tax benefit but families who stay at home do not. Tourism, particularly domestic tourism, can help drive growth in the UK economy but only if it remains competitive. We urge the government to reduce VAT on UK holidays to a fair level, so that we can offset the impact of a falling euro and reduced APD charges.”
David Bridgford, strategy director at Merlin Entertainments, said: “The UK government has failed to understand that tourism is a price sensitive export. Their failure to address the UK’s price competitiveness means UK tourism businesses are losing out and the tourism jobs we could create are being exported to our rivals.”
Graham Wason, chairman of the Cut Tourism VAT Campaign, said: “The government has a huge opportunity to boost British exports by lowering VAT. Other European countries, like Ireland, know that helping their tourism industries compete is an investment that will pay major dividends in terms of jobs and extra tax revenue. It’s time for Westminster to recognise the benefits of a lower rate of Tourism VAT.”