Budget offers cold comfort for Bristol hoteliers

As the dust settles in the wake of Rishi Sunak’s third budget, hoteliers in Bristol say the Chancellor has given them nothing but cold comfort for the winter.

Like many businesses in the hospitality sector, members of the Bristol Hoteliers Association (BHA) had hoped for an extension to the current reduced VAT rate. 

But while Mr Sunak did announce a one-year 50% business rates discount for hospitality sectors, there was no mention at all of the VAT rate, which is due to return to its normal rate on April 1 next year.

Raphael Herzog, Chair of the BHA, said: “We had hoped for a little more support from the Chancellor in his budget at the end of October; not only was the VAT rate not mentioned, but there was very little mention of the hospitality sector in general, despite being one of the biggest UK tax contributors and also one of the sectors that has suffered most during the pandemic lockdowns.

“We fully supported the #VATsEnough campaign, which called for the current 12.5% VAT rate to be made permanent for our sector.

“As it is, many businesses still face a very uncertain future and also we have challenges to overcome such as the staff shortage which is posing a considerable challenge to post-pandemic recovery prospects.

“For some hotels, the cost of utilities might go up by as much as 300%. There are increasing costs of food and beverages, increases in costs for our suppliers and there is also the increase in the rate of the living wage going to £9.50 per hour.

“In simple terms, this means it is going to cost more for guests to stay and eat in hotels, which is going to make it very challenging for some hospitality businesses to balance their books.

“Added to that is the continuing staff shortage. We hear every day that, all around the UK, some hotels, restaurants and bars are not opening fully because they simply don’t have the staff they need. Some are operating at only 75% capacity, or even less.

“The Government has introduced temporary visas to help with the shortage of lorry drivers. We had hoped the Chancellor would announce something similar for the skilled workers we are struggling to find, including chefs.

“Hotels are also having difficulty struggling to find the waiters and housekeeping staff that they need in order to provide the standards of service that our customers expect.

“Even where wages have increased by 20 percent or more, hotels are just not getting the applications they need for these roles.

Another challenge facing hotels is that they are still not yet seeing the return of conferences to anything like pre-pandemic levels of 2019.

Mr Herzog said: “Many people are still working from home, which means corporate travellers are not using hotels, and added to that challenge is the fact that the leisure business is now slowing down again compared to the summer boom.

“Usually at this time of the year, we are planning for Christmas but this is also very slow this year, as many companies don’t want to engage in large social events because of ongoing Covid fears, which is very understandable, of course, but which is one more challenge which does not help the hospitality industry.”