Hospitality Industry: How We Can Strengthen the UK Hospitality Industry

The UK hospitality industry is on the brink of great things: David Cameron’s landmark speech last year placed the hospitality industry at the heart of the UK’s economic recovery and a remarkable series of events over the next few years, including the forthcoming Royal Wedding and Olympic Games, will thrust the UK hospitality industry into the spotlight.

The British Hospitality Association (BHA) was quick to recognise the potential and has launched a new agenda for 2011 – The Hospitality Economy Proposition.

We speak to Ufi Ibrahim, the BHA’s new chief executive, and ask how we can strengthen the UK hospitality industry through more effective partnerships. How can stronger partnerships within the UK hospitality help it to grow?

Ibrahim: The hospitality industry is notorious for being so fragmented – over 300,000 separate establishments. This is one of its greatest strengths but also one of its greatest weaknesses as this fragmentation makes it difficult to generate a single, coherent response to issues affecting it. So it’s important to try to bring together all these different interests so that the industry can speak with one voice – and thus bring influence to bear on government policies.

That’s why hospitality needs stronger partnerships – between the major companies, individual hotels, restaurateurs, branded restaurant groups, caterers and contract caterers – to speak with one voice. Will Local Enterprise Partnerships play an important role in fostering new partnerships within the hospitality industry?

Ibrahim: LEPs are critically important to the future of the local tourism but we have concerns about their funding, their aims, their organisation and their ability to deliver. In place of eight Regional Development Agencies we have some 40 or so LEPs and potentially, some 50 or so Destination Management Organisations which will need the support of their respective LEP.

The difficulty of influencing them all is that the whole tourism effort is more diffused. DMOs have the potential of fostering tourism in their locality, but much will depend on the influence that the local hotel industry can bring to bear on their activities. They rely on funding from local authorities and local industry and it’s not yet clear how this will be achieved. But they have the potential of binding the local tourism industry more closely together in a common partnership.

However, this will take time and requires strong leadership in the public sector from VisitEngland as well as the private sector and, of course, from BHA. Our members will sit on LEP and DMO boards and help to influence the decisions they make – they have the experience and the knowledge. How would BHA like to see government policy and regulation develop over the next few years?

Ibrahim: Briefly, in partnership with the industry. One of our major concerns is that regulations are introduced by one department of government without consultation with industry or, indeed, with any other department – and all without recognising the damage that might be caused. So we are very keen to set up a cross-cabinet committee for hospitality and tourism to coordinate policy and bring about greater cohesion across government departments.

We also want the cross-Whitehall Tourism group to be revived. We are in constant touch with many Whitehall departments so there’s a great deal of discussion already going on and we’re working to ensure that the industry’s views and concerns are taken aboard. How might a partnership approach work in the UK?

Ibrahim: The BHA itself represents the partnership approach, of course. It’s an association of different sectors – hotels, restaurants, caterers for example, all working together with one objective: to promote the interests of the hospitality industry for the common good.

We’ve got very heavyweight partners working with us and a partnership between private interests and public bodies, and of course the government, is the only way to meet international competition and grow the hospitality economy. What are the major challenges that must be overcome?

Ibrahim: The industry is made up of a great many individual operators. The challenge is to ensure that they are part of a whole – that they are a key part of one of the most important industries in the country and that if they can all work together in a common cause, we can bring a great deal of pressure to bear on policies and actions. This is why LEPs are so important. The local hospitality industry must make its voice heard in their formation and in their activities. If it doesn’t we’ll be wasting a huge opportunity.

And, of course, we’ve got the challenge of international competitiveness. The government has to recognise that some of its actions directly conflict with its stated objective to encourage tourism as an economic driver. For example, high VAT rates, difficulties in obtaining visas and high Air Passenger Duty.

The 20% rate of VAT in the UK contrasts hugely with the 5.5% rate in France for hotel accommodation and meals. Other European tourism competitor countries have similar low VAT rates. UK hospitality and tourism needs a level playing field if it is to reach its full potential. Do you feel that government can be a positive force in the partnership in the long-term?

Ibrahim: Of course! Both in the short-term and the long-term. Government actions and policies can make it either a negative or a positive force.

It’s a negative force when it introduces policies that put additional costs on employers, or burdens them with more regulations that aren’t properly thought-out and are difficult to implement, so that the industry’s growth is held back.

It’s a positive force when it listens to industry’s concerns and recognises the potential damage a certain policy may cause, hence the need for consultation.

We aim to create 236,000 new hospitality jobs by 2015 – but that depends on the government creating a favourable framework in which the industry is encouraged to grow. How can effective partnership affect the visibility of the UK as an international destination?

Ibrahim: Well, if we can persuade the government to reduce the level of VAT on hotel accommodation, on meals and some other items, and if we can bring about a change in visa policy so that potential visitors from India, China and other non-EU countries are not deterred by cost and complications, we will have gone a long way down the road of making UK tourism more competitive and thus making it more visible on the world stage. That’s the ultimate prize.

That’s why partnership with government is so extraordinarily important. We have to work with government to make the industry grow. And making UK tourism more competitive will help achieve this growth which we believe will create 236,000 new jobs by 2015.


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