The campaign will also have the support of the British Hospitality Association (BHA), the British Beer & Pub Association (BBPA) and other senior figures in the industry.
Due to be officially launched later this month, the drive is based on success stories of similar moves across Europe, which have resulted in more jobs, increased investment and higher cashflow.
Open to business
Travelodge CEO Guy Parsons announced the initiative at Monday’s Olympics conference, hosted by sister publications M&C Report, BigHospitality, Morning Advertiser and Restaurant.
Parsons said a VAT cut would allow the industry to leave a legacy after the Olympics by generating 220,000 more jobs and ultimately pumping more income into the exchequer.
He called on other hoteliers and hospitality operators to back the campaign and lobby their MPs.
“One of the biggest complaints that people have, both in the UK and abroad, is that our hotels are too expensive. We have to, as an industry, prove that Britain is open and willing to take business at a reasonable price. Because otherwise my fear is that we will in fact lose out.”
“The only way we will really build a legacy for the hospitality industry is to create more jobs. And we’ve got an absolute opportunity to do it right here, it’s been proven in a number of other countries.”
Current EU legislation enables member states to set a separate VAT level for hotels and restaurants.
To date, 21 European countries have a lower VAT rate for hotels than the prevailing national rate, while 13 countries now have lower rates for restaurants and catering establishments.
For example, VAT in Germany it is 7 per cent, in Belgium it is 12 per cent and in Finland 13 per cent. At 20 per cent, the UK has one of the highest European VAT rates for the sector, second only to Denmark.
France is perhaps the greatest success story, after the VAT rate for hotels was reduced to 5 per cent from almost 20 per cent following a campaign by the hospitality leader Jacques Borel.
Research conducted by Borel, who is President of the Union des Métiers et des Industries de l'Hôtellerie, has demonstrated the benefits of lowering VAT for the sector, which he says would be applicable in the UK too.
When VAT is reduced, he says, half of the reduction goes to lower rates for consumers, while the other half goes to salaries, training, investment and profit (10 per cent on average goes to profit).
“The result of all of that is you get more visitors,” explained Parsons.
“We will end up as a country with more visitors if the rates are lower. And if you get more people coming to the UK it will create more jobs. Jaques Borel has estimated that up to 220,000 jobs will be created if we can reduce the VAT rate to 5 per cent.
“If we’re really looking for a lasting legacy for the hotel and catering industry, what better legacy than to create 220,000 jobs and actually increase the amount of income tax and increase the amount of revenue going in to the exchequer at a point when the government is desperate to create more jobs? And this is one of the few industries that can do it.”
Full details of the campaign will be released within the coming weeks.