More hotels are choosing to pass the full 15% government VAT cut on to guests and reduce room rates and food and drink prices as a result.
Since the Chancellor announced plans to cut VAT for the hospitality and tourism sector from 20% to 5%, the issue has been hotly debated by businesses on whether to retain the saving in-house or to reflect the discount in their pricing for guests.
Speaking to Boutique Hotelier, Vickita Reddy from Aviator in Farnborough said the hotel was passing the ‘full 15% VAT discount to guests’ applicable across all accommodation, food, non-alcoholic beverages, with menus and pricing adjusted to reflect this reduction.
“With our menu for example, our soup of the day is £5.69, one of our salads is £7.44 etc,” she adds. “The same is for our room rates too, which is quite unusual for hospitality as you would usually round the figures up.
“Even though we are coming out of lockdown, people are simply not going out near as much as they were before COVID-19, whether it’s down to having less money to spend or a lack of confidence, and this is completely understandable. Therefore, as a responsible business, we have decided to pass the full 15% government VAT discount to our guests to not only give them the confidence to venture out again but to make their experience more affordable so they too can benefit from the support that the government is providing.”
Aviator is now actively communicating this discount to guests through its various marketing channels to drum up renewed interest for bookings.
Alongside this, Ten Hill Place in Edinburgh is following suit. Scott Mitchell, managing director at Surgeons Quarter which runs Ten Hill Place, said: “We have reduced the price of our food and rooms, and adapted our menus accordingly, meaning our customers will really notice the difference. We’re hopeful all of this will help to reboot Edinburgh’s tourism and the hospitality industries, which have suffered a devastating hit.”
Rob Paterson, CEO of Best Western GB spoke out on LinkedIn saying that it wasn’t as ‘straight forward as a calculation of VAT to pass on’. The cuts simply helps the group to maintain low rates currently offered, for longer.
“We were all selling significantly reduced offers to encourage our markets back in hotels and restaurants prior to this relief – we all want our customers to come back. The VAT relief simply helps us to sustain those amazing deals a little longer. The overarching branding from the Chancellor was ‘A Plan for Jobs’. Hopefully the VAT relief allows us to sustain the great deals for consumers and keep our amazing staff employed in the meantime.”
However, on the other side of the argument, many hotels spoke out about the dangers of reducing prices for the short term and the expectations of the consumers going forward.
Philip Bolson, managing director at Lake District Hotels also commented on LinkedIn, saying: “The reduction helps us to reaffirm our commitment to keep our people, re start investment plans, support local business we collaborate with and plan for winter. We balance this with already having attractive deals and promotions out on the market. Since we started selling again we have seen strong demand and pick up and so must continue to look after our people to deliver great service.”
James McComas, general manager at Champneys Eastwell Manor agreed, adding: “The cut is temporary – I suspect the fear of price resistance when the rate rises again, coupled with the losses the vast majority need to try and recoup will mean no price drop. Perhaps a limited drop on certain elements, but not across the board.”
Speaking on Twitter in response to the debate, Robin Hutson, CEO of Home Grown Hotels which operates the Pig brand and operator of Lime Wood said that both hotels would be keeping the full amount, but donating £5 on every hotel booking until January 2021 to Hospitality Action and Action Against Hunger. “…we hope to give them a big cheque in January. Would be good if other hotels could afford to follow suit” he tweeted.