Removing barriers to growth in the hospitality industry

The Big Hospitality Conversation

The Big Conversation in Hospitality is a joint initiative between the British Hospitality Association (BHA), Springboard and Business in the Community. It brings together influential industry leaders from hospitality businesses and young people to stimulate dialogue, encourage quality work experiences, offer apprenticeships and create new jobs. BHA takes a powerful message to Government about the significant contribution the hospitality industry is making to stimulate economic growth and address youth employment.

At our annual summit in June 2013, The BHA announced that the UK’s hospitality industry has pledged to create 30,000 new job opportunities for young people by 2015, around 3,000 of which can be in Scotland. These pledges were made at a series of nine Big Hospitality Conversations which recently took place across the UK from Scotland to Cornwall and were attended by over 1,200 industry representatives.
The Hospitality industry employs 10% of the national workforce and is uniquely suited to getting young people onto the first rung of a rewarding career ladder.

The Hospitality Industry in Scotland
The significance of the hospitality industry to the local economies of Scotland is well known but, until recently, has been poorly documented. It is clearly a key contributor to every local authority’s economy, particularly through its employment and wealth creating potential.

Over 110 new hotels have been built in Scotland in the last decade with investment exceeding £3bn. There has been much refurbishment of existing properties, and new restaurants and attractions have opened. More investment is underway or is planned for the future. But this investment needs to be matched by the support that hospitality businesses receive from local authorities and government, both at Westminster and Holyrood.

Key facts
The hospitality industry:
• Is one of the main pillars of the Scottish economy;
• Is an the economic driver in every part of the country;
• Employs over 220,000 people directly and, indirectly through its suppliers, a further 120,000 – 8.6% of Scotland’s jobs;
• Contributes £4bn to the Scottish economy in wages and profits.

An independent study by Deloitte forecasts that if VAT is reduced to 5%, 43,000 full time equivalent jobs will be created in the Scottish accommodation sector. However, these jobs are dependent on the right conditions for growth and the BHA has issued a number of ‘calls to action’ to ensure that these are in place

Barriers to Growth
All but two other EU states have a reduced rate of VAT for accommodation and many also have a reduced rate for attractions and restaurants. France, for example, has a reduced rate on accommodation and restaurant meals of 5.5%; Germany’s rate is 7% and Italy’s 10%. These low rates make the UK, including Scotland, uncompetitive with the rest of Europe. This will remain so as long as VAT remains at the present rate.

The rising rate of Air Passenger Duty acts as a disincentive to international travellers and high road fuel prices make it increasingly expensive for visitors to travel, especially to rural areas.

But growth is dependent on more than fiscal policy. The Scottish Government, local authorities and Enterprise agencies must recognise that the industry:
• Is able to create valuable and skilled jobs as effectively as other business sectors;
• Supports other key sectors of the Scottish economy;
• Generates exports by attracting international visitor spending.

Minimising the regulatory burden with its associated costs will help businesses to achieve their potential. Effective and sustained tourism promotion of Scotland, and its parts, is as important to growth as attracting capital investment. Equally, there is a need for investment in our transport infrastructure, digital connectivity and workforce training.

Looking to the Future

Reducing VAT will attract more overseas visitors to Scotland as well as encouraging more British people to holiday here. The principal benefit of this will be the creation of more jobs and greater wealth.

The British Hospitality Association Scotland’s Call to Action is to remove the barriers to growth thereby enabling this resilient industry to make its full contribution to Scotland’s national and local economies. The opportunity is there to be grasped for the benefit of the whole nation.

Willie Macleod
Executive Director, Scotland
British Hospitality Association

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