Hotels are getting a raw deal

TOURISM has been a vital contributor to Scotland's economy, and, in the wake of the global financial crisis which wreaked havoc across the financial sector, it has been playing a critical role in helping the economy pull through to better times. So, the news that some hotels are to face tax increases totalling £3 million will be a body blow for a sector that needs to be at its most competitive. That will be a real challenge for those now facing rates increases of more than 100 per cen

To make good this extra impost, the affected hotels will have to sell an additional 35,000 nights – and this without the benefit of the Homecoming events they enjoyed last year.

While it is claimed that a majority of hotels will see their rates bills fall, this does nothing to alleviate the plight of those who face stiff increases. And it is a poor argument indeed for not smoothing out increases of this sort through transitional rates relief. Such assistance is available to hotels in England and Wales but not to those in Scotland. This seems a poor way to treat those who provide a major source of employment.

Hotel rates are based on turnover, not – as with other businesses – on the rental values of the properties they own. And this rates impost is based on turnover figures for 2008 – before the recession hit and triggered a sharp fall in business and conference events.

Given the increased importance of tourism to the economy at this time, the Scottish Government should reconsider its stance against transitional relief.