Hoteliers stress value to UK Parliament
17 SEPTEMBER 2015 9:11 AM
An inclusive spectrum of the U.K. hotel industry descended on Parliament to underline its worth to the nation and demand a fairer playing field with Europe.
LONDON—More than 30 Members of Parliament and an inclusive spectrum of the United Kingdom hotels and hospitality industry met at the center of British politics, Parliament in Westminster, on 16 September for the inaugural Hospitality & Tourism Lobby Day.
The goal? To highlight to those in power the importance of the hospitality and tourism industry to British gross domestic product.
Within that broad goal were several other sticking points hoteliers and the British Hospitality Association, a lobbying group for the hospitality industry, wanted to stress to politicians:
- Reducing value-added (sales) tax on hotels, hospitality and attractions from the current rate of 20% to a percentage more in line with other European nations;
- Further reducing the bureaucracy on visa requirements for Chinese visitors. The paperwork has been simplified, but Chinese travelers still have to go through an expensive process of visiting one of three processing centers in China;
- Having the government’s tourism brief unshackled from its current home buried within the Department of Culture, Media & Sport so that it can enjoy a higher status and allow hoteliers to further underline its importance to the economy.
Those who showed up to advance these agenda items included hoteliers representing small chains, hoteliers representing publicly listed mega-chains, private equity executives, consultants, chairs of convention and visitor bureaus, and lobbyists.
Earlier in the day, 33 MPs sat with hoteliers from their political constituencies to discuss the problems and bequests directly affecting business in those areas and across the U.K.
One MP in attendance was Nigel Huddleston, who represents the Mid Worcestershire constituency and was until his election at the last U.K. general election in May, head of industry talent at Google. He is on the government’s Culture, Media and Sport Committee.
Hoteliers from regions of the U.K. worried that such can be the onus on London, the problems they see—narrow margins; the different spectrum of tourists they receive; the difficulties in finding and retaining staff and talent, to name three—were not sufficiently appreciated in the capital, despite most MPs representing areas outside of it.
Ufi Ibrahim, CEO of the BHA, told Hotel News Now that it was not case of London versus the regions. The reduction in VAT in particular, if made into law, will help the entire industry, Ibrahim said.
She added the BHA had the support of more than 130 MPs for the reduction.
According to an Oxford Economics report commissioned by the British Hospitality Association, “Adding together … direct, indirect and induced impacts … the total gross value added contribution to GDP from the hospitality industry is estimated to have been £143 billion ($220 billion) in 2014. … Equivalent to 10% of U.K. GDP.”
The report added “the hospitality industry is estimated to have supported a total of 4.6 million jobs in 2014 either through its own activities, its supply chain or the induced expenditure of its employees and those in its supply chain. This equates to 14% of total employment in the U.K.”
Publicly listed InterContinental Hotels Group is very much behind the lobby day’s goals.
Stephen McCall, IHG’s COO, Europe, told HNN that although IHG was an international company, its roots are in the U.K. from its Bass brewing company origins in the 18th century.
He said his hotels’ U.K. owners were eager for VAT reductions to help provide them a level playing field for guests’ travel spend. Why, he asked, would Chinese guests go to all the trouble of jumping through extra hoops and expense to secure a visa to the U.K., which is one country, when they could just secure one visa for the 26 nations signed up to European Union’s Schengen Agreement, only to then, at the current 20% VAT rate, have to spend more money to stay in the U.K.?
Keep on pushing
Hoteliers understand changing government policy takes patience and watertight mathematics and messages.
Richard Grime, MD of Paragon Hotels, which has 17 hotels, all in the U.K. and under its Classic Lodges umbrella, told HNN that top of his wish list was for the U.K. government to understand the benefits hotels and hospitality provided for both the treasury’s coffers and the health of the nation. More of the same could be added with heightened travel spending coming off the back of reduced VAT levels, Grime said.
Finding talented staff and the costs involved in the government’s new requirement to enroll employees into compulsory workplace pension schemes were both headaches for Ciaran Fahy, CEO of Ellerman Investments’ hotel division, and Heiko Figge, head of the hotels portfolio of private equity investor Moorfield Group.
Fahy told HNN that in his estimation, enrollment costs per employee could be around £250 ($385), costs that could well be pushed to guests in higher room rates.
Figge, a board member of the BHA, added that in his estimation, the government did not fully comprehend the employment characteristics of the industry.
We should be very proud how we create jobs and nurture talent that begins almost with no skills but can rise to the very top within the same hotel chain, Figge said.
Ibrahim said an additional goal for the BHA was to ban rate parity clauses in agreements between online travel agencies and hotels.
She took hope in the recent announcement that France was banning the practice.
Ibrahim stressed the industry needs to educate consumers that booking through OTAs doesn’t necessarily lead to cost savings.
Everyone at this inaugural event said they saw real impetus from the industry but that the battle continues.
On the way out of the sumptuous Palace of Westminster, Martin Couchman, deputy CEO of the BHA, nodded in the direction of Her Majesty’s Treasury on Horse Guards Road, across the road.
He said the industry needs to keep up its efforts because at the end of the day, it’s the treasury with its hands on the purse strings.