VAT cut 'won't help us', says UK hospitality and tourism

A poll by UKinbound found just one in five said the temporary VAT reduction from 20% to 5% would positively impact their business, while 52% said there would be no benefit.

UKinbound said its Business Barometer results indicated the government stimulus “falls short and won’t help a significant number of valuable companies in the inbound tourism industry that are in a critical state”.

When questioned on the merits of the Job Retention Bonus, nearly two-thirds of businesses stated they hoped to be eligible, however one in 10 companies said that they don’t expect to bring anyone back from furlough.

Confidence levels about the impending 12 months also sit at a near-record low, with just 13% of respondents stating they were confident about bookings, visitor revenue and customer orders in the next year.

The survey also asked members about their businesses in the second quarter of 2020, with 96% confirming they were down on the same period last year, by an average of 92%.

Joss Croft, UKinbound chief executive, said: “Our latest Business Barometer results further confirm that many inbound tourism businesses are in critical need of specific support, and that the government’s ‘one size fits all approach’ leaves many out in the cold.

“Our members are hopeful that the international market will return from spring 2021, but this leaves a gaping hole in business finances until then, and although the VAT cut and Job Retention Bonus is welcome, they alone will not help previously profitable inbound tourism businesses stay afloat.”

Last month, the association expressed concerns that operator and destination management company members would need to make around 10,000 job cuts. It warned more than half would fail within the next six months if the government does not intervene.

UKinbound has asked for immediate support for the inbound industry.

Croft said: “We implore government to act swiftly with measures that will positively impact businesses and save jobs, such as the introduction of a Tourism Resilience Fund, amending rate and grant relief so it’s accessible to tour operators and DMCs, and introducing a national insurance and corporation tax holiday.”