The hospitality industry has welcomed news of the Chancellor’s recovery plan, which includes a cut on VAT, a eating out discount initiative and the introduction of a new furlough retention scheme.
Announced yesterday in parliament, Rishi Sunak laid out plans to reduce VAT from 20% to 5% for six months for all hospitality businesses, including food, accommodation and attractions. He also introduced the first of its kind eating out discount scheme, Eat Out to Help Out, which will offer consumers 50% off eating out, up to £10 per head, throughout certain days in August at participating businesses.
A £1,000 job retention bonus will also be awarded to businesses for each employee brought back to work from furlough before January 2021.
UKHospitality chief executive Kate Nicholls said that it was ‘reassuring’ that the Chancellor singled out hospitality and tourism as a vital part of the UK’s economy and that it had been ‘uniquely hit’ by the pandemic.
She added: “Customer confidence is key to our sector’s revival and our ability to help Britain’s economic recovery. Applying every precaution to provide safe venues will count for nothing if customers are not coming through our doors. This significant VAT cut, heightened ability to retain staff and incentives for consumers to eat out together amount to a huge bonus.”
Howard Hastings, managing director of Hastings Hotels, welcomed the news saying rates were being updated to reflect this and lower-priced accommodation will now be available to book as a result.
The introduction of the ‘Eat Out To Help Out’ will also be implemented across the group’s seven properties.
Raphael Herzog, Chair of the Bristol Hoteliers Association, said: “The measures outlined in the Chancellor’s speech were very welcome.
“We had very much hoped for a VAT-cut but did not expect it to be dropped so low.”
Joss Croft, UKinbound CEO said: “These measures will not help the many businesses involved in inbound tourism who drive regional economies and jobs, and who are on the brink; longer-term support will still be required for these businesses, which have been hit even harder than domestic and outbound.”
Stephen Gow, general manager of The Chester Hotel in Aberdeen and The Chester Residence in Edinburgh said the measures could help get The Chester Hotel back towards a seven-day dining operation.
“It’s our understanding that hospitality businesses will register through a website to claim and this will be repaid to businesses within five days. If this system is as efficient as the HMRC furlough payments have been then this will provide an excellent support for businesses in our sector which need all the help and support they can to face the future post lockdown.”
Stephen McCall, CEO edyn added that a longer-term intiative for cutting VAT should also be considered.
He said: “As the UK has one of the highest VAT rates on hospitality in Europe, the Government may need to introduce further, more long-term initiatives such as a permanent reduction in VAT to see a lasting impact. Such measures would help to restore confidence and enable the UK to maintain its status as a world-class destination for visitors.”
Neil Pattison, director at job board Caterer.com warned that there was a real risk in the long term if too many skilled workers forced out of the sector as furlough ends.
He explained: “Around 50% of hospitality businesses have yet to reopen, and revenues for the sector are expected to be around 60% down this year. At the height of lockdown jobs posted at our site dropped from 18,000 to 1,000. Our Hospitality Redeployment Hub, launched during the pandemic to help displaced hospitality workers, has seen candidates make over 50,000 applications for temporary roles in other sectors.
“We’re seeing a return of jobs to the site now that the sector is reopening and the sector is absolutely focused on coming back strong, but the climb for is steep.”