Budget response from global hotel consultancy HVS

Thursday, March 12, 2020

The Chancellor of the Exchequer has announced a number of measures in his Budget statement which should assist the UK hotel sector in the wake of the coronavirus, which has already precipitated a number of events and overnight stays in hotels to be cancelled or postponed, thereby causing a fall in hotel occupancy.

The Chancellor has singled out the sector to receive a number of benefits which will help to reduce some of the pain, especially for smaller businesses – and not therefore for the larger enterprises that make up the vast majority of the sector. These measures include:

• Firms with fewer than 250 staff will be refunded for sick pay payments for two weeks
• Small firms will be able to access “business interruption” loans of up to £1.2m
• Business rates will be abolished for firms in the retail, leisure and hospitality sectors with a rateable value below £51,000
• Duties on spirits, beer, cider and wine to be frozen
• Business rate discounts for pubs to rise from £1,000 to £5,000 this year

“The Government seems intent on helping the small business sector deal with the downturn the coronavirus will cause, not least as future measures to limit travel and public gatherings are likely to be introduced shortly, thereby deepening the anxiety. The reduction in interest rates and extending the time to pay taxes will also help to address cash flow concerns, but there was no move to remove or reduce VAT in the sector or to reduce employers’ national insurance contributions, which would have had a more fundamental impact on the sector,” commented Russell Kett, chairman of the London office of HVS, the global hotel advisory firm.

“Despite this Budget being described as ‘the biggest giveaway in 30 years’ there is sadly little to bring much short- or longer-term cheer to the vast majority of regular hotel owners, investors and operators within the UK,” he added.

“Some businesses have already started to cut back on staff and curtailing all but the most necessary expenditure, in some cases most severely, in a response to plummeting occupancy levels of which the Government seems to be totally unaware. Maybe they only will once these businesses file for bankruptcy. That would take us back to the early 1990s and we really don’t want to go through all that again. I urge the Chancellor to do more to prevent this from happening before it’s too late,” he concluded.

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