Hoteliers renew calls to extend VAT reduction

Hoteliers in Bristol have made a fresh plea to the Government to extend the current reduced rate of VAT for their businesses, which face a bleak start to 2022.

Most members of the Bristol Hoteliers Association (BHA) suffered a difficult end to 2021 with many reporting business was at least 30 percent lower in December than they had hoped for.

With no furlough scheme to fall back on and costs increasing, the BHA say more Government support is vital if businesses are to survive.

BHA Chair Raphael Herzog said: “At the end of last year, the Government announced grants of up to £6,000 for hospitality businesses. But that would only cover us for what we lose in one day with a conference booking, as an example.

“As it is, there are very few conference at the moment, because people are worried about mixing. Few people are travelling, even fewer are taking leisure trips, so it’s really quiet.

“January and February are looking extremely slow for us, on the back of a very disappointing Christmas period.

“At the very least, we need the Government to extend the reduced rate of VAT at least until the end of the summer in order to give us some chance of sustaining our businesses. Ideally, the reduced rate should be made permanent.

“Right now we have very little revenue, increases in costs and continuing staff difficulties. Not only is recruitment hard – in terms of available recruits and costs – but many businesses are losing people temporarily because they have to isolate.

“Some hotels have had more than 20 staff in one week unable to work because they have tested positive or have to self-isolate.”

In July 2020, the Government announced a temporary 5% reduced rate of VAT for the hospitality industry. This was increased to 12.5% in October 2021.

At present, this rate will run until 31 March, after which VAT is due to rise back to the full rate.

But hoteliers are calling for the reduced rate to remain if they are to have any realistic chances of recovery, given all the current challenges.

Mr Herzog said: “It’s very hard to operate a business in the current climate, with more money going out than coming in, and an extremely challenging first quarter ahead.

“We need more support, not only from the Government, but from other companies and customers to help with our long-term recovery from the impact of the pandemic.”