BHA’s Ufi Ibrahim: “Where Next in 2013”?

2012 has been an amazing year for UK hoteliers. But where should the industry go next? We invite BHA chief executive, Ufi Ibrahim, to guest write this issue’s “Leading View” and set out her priorities for success in 2013.

Actionable Intelligence: Read Ufi Ibrahim’s five actions for 2013

With the Olympic and Paralympic Games now firmly behind us, the time has come to reflect on their impact.

The hospitality industry really appreciates the long-term benefits of the Games. From infrastructure investment to heightened visibility as an international destination, the Olympics have made a solid investment in the future of hospitality, travel and tourism for the UK.

Let us reap the benefit of this raised profile – the key factor that I think will be the true legacy of the 2012 Games to UK tourism.

Olympic Setbacks

Yes – there have been some short-term drawbacks.

It is clear that the Games totally disrupted normal hotel booking patterns during July and August. While occupancy levels were healthy during the two-week period of the Olympics, the weeks between the Games and Paralympics saw plenty of availability. Demand was dislocated by the fact that many typical visitors to London had decided to stay away because of the Games. There was very little corporate demand and demand from leisure travellers to London, outside the Olympic Games, was weak.

Of the 110,000 rooms in London, 40,000 rooms were originally offered by London hoteliers at discounted rates to the Olympic family to ensure the success of the Games; up to half of these rooms were returned, increasing supply and impacting on room rates.

The BHA discussed this downturn with the Mayor’s office, Transport for London, Greater London Authority and VisitBritain and agreed more aggressive promotions to get local, domestic and international traffic flowing again. These included free parking at street level on weekends immediately after the Olympics and an active campaign, both at home and abroad, to boost business for the rest of the year and to maintain the UK’s high tourism profile.

These discussions were aimed at co-ordinating concerted campaigns to keep London (and the UK) firmly positioned on the global tourism map. London is one of the greatest tourist cities in the world and we are determined to keep it that way.

2013 and Beyond

The Olympic Games has overshadowed most other activities in 2012, though two BHA events – the Hospitality and Tourism Summit in June and the Big Conversation in July – focused on two ongoing issues that we must take into 2013 and beyond: the industry’s relationship with government.

In particular, this relates to the high level of VAT in the UK, the need to ease visa controls and industry’s ability to recruit and retain a skilled workforce.

At the Summit, major employers pledged to reduce unemployment by offering thousands of work placements, apprenticeships and job opportunities during the next three years to the young unemployed – a pledge that was reinforced by the Big Conversation, held a few weeks later.

VAT Rate

The UK has the third highest level of VAT for hotel accommodation and entry to attractions in the whole of the EU, making the UK uncompetitive with most of Europe.

Out of the 27 EU member states, only four (Denmark, Lithuania, Slovakia, and the UK) do not take advantage of a reduced rate of VAT on visitor accommodation, while the UK is one of only 13 EU countries that apply full rate of VAT on admissions to amusement parks and one of only ten countries that applies full rate VAT on admissions to cultural attractions. 14 countries have a reduced rate for restaurant meals.

Of our principal competitors, France and Germany charge seven per cent on hotel accommodation, Spain eight per cent and Italy ten per cent.

Reducing the rate of VAT for hospitality and tourism services has been proved to work. The track record across Europe shows that a reduction in VAT stimulates investment, creates employment and boosts growth.

In Britain, we believe that a reduction in VAT would lead to lower prices, encourage more British residents to holiday at home and increase the number of foreign visitors.

A survey of BHA members showed that over 95 per cent would pass on all or some of the cut in VAT, if achieved, while 82 per cent would invest more in their product and facilities, while 67 per cent would employ more people.

All of this would lead to a virtuous cycle of increased demand, quality and employment. We shall be continuing our campaign into 2013.

Red Tape

Renewed pressure on government is also required to recognise that the complexities of obtaining a tourist visa is a major deterrent for potential visitors from key source markets like Brazil, Russia, India and China (BRIC).

Because the UK is not part of the Schengen Agreement, if visitors from these countries want to add the UK to their itinerary on a European tour they must obtain both a UK visa and a Schengen visa. This more than doubles the cost of visas and adds additional bureaucracy to the organisation of their trip.

All our main competitors, including France, Spain and Italy, are part of the Schengen Agreement.

Our campaign to ease visa policy gained added impetus during the year after the US announced its own plans to reform its own visa policy as a direct result of an intervention from President Obama. The US has now set a goal of attracting 100 million visitors by 2021, which will bring US$250 billion in visitor spending each year.

If tourism is to act as an engine of growth for the UK economy, the government must follow the US example by easing its visa policy. It should also reduce VAT for hospitality services.

These are two of the main barriers to growth for UK tourism and in 2013 we shall be continuing to put pressure on the government to remove them.

Actionable Intelligence: Read Ufi Ibrahim’s five actions for 2013

 

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