VAT, slow visa applications and red tape are main obstacles to industry growth

By Emma Eversham

- Last updated on GMT

Christopher Davy, chairman of the BHA thinks hospitality growth could be quicker if the Government gave the industry support
Christopher Davy, chairman of the BHA thinks hospitality growth could be quicker if the Government gave the industry support
The UK's high level of VAT, the slow processing of visa applications and Government red tape are the three major obstacles to growth in the hospitality industry, according to the British Hospitality Association's (BHA) chairman Christopher Davy.

In his speech at the Annual Hotel Conference in Manchester, Davy said research undertaken for the organisation's latest report Hospitality: driving local economies had shown that the hospitality industry is now the fifth largest in the UK and that it had the ability to create 236,000 new jobs in the UK by 2015.

However, he said the industry would not achieve its full potential without help from the Government who he said needed to lower VAT, speed up visa applications and remove red tape.

"Our industry doesn't want Government handouts, but we do want the Government to help us by removing some of the barriers to growth," he said.

VAT rates

Davy, himself a hotel owner, called for a rate of VAT that would make the UK competitive with its European neighbours. Currently the only two countries in Europe paying higher rates than the UK are Denmark and Lithuania.

He said: "We in the UK can't realistically compete with our European counterparts. This disparity applies to hotel accommodation and attractions. France's rate of VAT on accommodation is 5.5 per cent and it has also reduced its rate for restaurant meals.

"If we could reduce VAT to 5 per cent that would bring real growth and we are in talks with ministers on how we can do that. Campaigns others are running are helpful, but the real work is being done behind the scenes in discussions with high ranking officers."

Visa applications and red tape

Davy said the Government also needed to look at visa control procedures in order to boost the number of visits made by inbound tourists. In 2009 58,000 tourists cancelled trips to the UK because visas were rejected or took too long to process.

He also said the BHA was in talks with Government ministers on ways to remove regulatory burdens, or red tape from hospitality businesses.

"The industry is not looking for handouts, it's just looking for support," he said.

However, he revealed that talks between both parties had already succeeded in the Government agreeing to include hotels in the Enterprise Investment Scheme, to which they were previously excluded.

He added: "The Government has acknowledged that the restriction on hotel development is fruitless and from the 6 April 2012, hotels will be able to apply to the scheme which is good news for medium sized businesses and their investors."

The eighth Annual Hotel Conference took place at the Hilton Manchester Deansgate yesterday. Other speakers included Kiaran Macdonald, general manager of The Savoy and Thomas Magnuson, of Magnuson Hotels and Global Hotel Exchange.

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