How high VAT on Scotland's hotels is making it difficult to compete with rest of Europe – Stuart Beaufoy
As other countries cut taxes on hospitality, it’s time for the Westminster government to help an industry that employs 3.5 million people across the UK to thrive
Scotland is lucky enough to be one of the most beautiful countries in the world, with our scenery, our history and our culture all playing a crucial part in encouraging visitors both at home and abroad to make the most of the hospitality we can offer. However, we also know the cost of living is putting increasing financial strain on families and, if they are considering holidays this summer, affordability is going to be a huge factor for most.
At hotel companies like ours, we work hard to do what we can to absorb the big problems that issues like food inflation and the rising cost of energy are creating for all of us. We know there is a lot of competition out there and it means a lot to us when our customers choose to stay or dine with us.
Here in the Western Isles, we know we have the beaches, the mountains, the adventure activities and the famous Hebridean welcome to attract both domestic and international visitors – but we also know we are competing with the rest of Europe to get them here in the first place.
And the truth is, it is increasingly becoming an unfair fight for all of us involved in the hospitality trade across the UK – as the 20 per cent VAT rate faced by Britain’s food, drink and accommodation providers is among the highest anywhere on the Continent.
Let’s look at Ireland, for example – a big competitor for us but one that has a clear advantage. The current VAT rate on hospitality services there is 13.5 per cent and, in July, the rate on food and catering will be reduced to just nine per cent. This is to help the sector cope with the very same economic challenges we in the UK are currently facing. Elsewhere in Europe, it’s a similar story.
The inescapable truth is that we in the UK are competing as a tourism destination with one hand tied firmly behind our backs. Tourism is by far the most important industry in the Western Isles. At Cala Hotels, we employ 160 people and every single one of them lives here.
Imagine what businesses like ours could do for the local economy if we had the support we need. We would be in a much better place to improve turnover, to energise demand and to support regional growth. We could generate even more local employment.
Instead, we are faced with a short-sighted approach that is pushing us to the stage where we simply won’t be able to absorb the rising costs going forward.
We have recently seen the UK Government recognise the importance of reducing VAT for hospitality with its announcement of a five per cent rate for family admissions to visitor attractions and for children’s meals. That is a positive step but it should also be a down-payment on a lower VAT rate for the entire hospitality sector.
It’s time for them to free our hands once and for all and let an industry that employs 3.5 million across the UK thrive.
Stuart Beaufoy is director of Cala Hotels
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