Tourist industry facing triple whammy in 2015
Britain’s hard pressed tourism industry enters the New Year facing a triple whammy – thanks mainly to the current government’s failure to understand this important export industry.
As dozens of hotels, B&Bs and attractions slowly recover from last year’s horrendous 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 EURO’S WEAKNESS means you can buy a Euro now for just over 78p compared to 84p last March, making the continent cheaper by 7 per cent. This will almost certainly lead to a massive rush to book holidays in Europe and further afield by thousands of British families. This could have a devastating effect on many struggling UK tourist companies and resorts.
AIR PASSENGER DUTY (APD) rates for children travelling abroad is set to be abolished starting in May 2015. While reducing barriers on tourism is positive, this will, unfortunately, harm Britain’s competiveness. It will undoubtedly encourage more families to take short stays and summer holidays on the continent, without an equivalent benefit for those staying in the UK.
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. This makes it much 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 over 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 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, 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.”
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