With hoteliers facing a tough combination of a poor economic climate, high VAT rates and extensive planning delays, it is argued that a source of funding would be of great value to the industry.
Martin Couchman, deputy chief executive for the BHA, said: “The change would have been potentially very good news for many businesses – and their investors - because it would have encouraged investment in the industry through new sources of finance.”
New funding opportunities
The BHA was led to believe that an announcement to remove the restriction on investment in hotels from 6 April 2012 would have been introduced in the autumn statement or in the draft Finance Bill clauses which were published in December.
“We had many indications that the restriction would be removed but this did not happen,” added Couchman. “At a time when many small and medium sized hospitality businesses want to expand and develop, the EIS scheme would have opened the door to new funding opportunities.
“There is currently a £7m maximum gross asset rule but the draft Finance Bill includes an increase to £15m, subject to EU State Aid approval, which is not expected to be a problem.”
Although Chancellor George Osborne did offer to help small and medium-size businesses in his statement, with promises to relax red tape around health and safety and make it easier to take on apprentices, Couchman insisted that the BHA was continuing to press the Treasury over this issue.
“We shall continue to argue that the scheme is highly relevant to hotel operations,” he said. “We cannot understand why independent hotel operations were ever disbarred from benefiting under the scheme.
“One of the government’s principal objectives is to encourage investment in industry and the EIS scheme has the potential to encourage independent hospitality businesses to expand and develop.”