The boss of Premier Inn-owner IHG has urged Andy Burnham to drop plans for a tourist tax, which they said will deter tourists and investors from the UK.
Neetu Mistry, the hotel group’s UK and Ireland managing director, told City AM that she has directly warned the government against the policy, which will allow local authorities to charge a levy on overnight accommodations.
“We’ve been really clear on the fact that we do not support this. It’s an additional barrier stopping people making the most of stays in the UK,” she said.
“We’ve seen the tourism levy in other countries acting as a deterrent to stop the flow of tourism, and that’s not what we want in the UK.”
The government’s overnight visitor levy could add more than £100 to the cost of a two-week family holiday and cause the loss of 33,000 tourism sector jobs, trade body UK Hospitality has found.
“We want to encourage tourism, we want to make it affordable for people to stay and enjoy the beautiful landscapes and places that we have in the UK, but this is really a deterrent for that,” Mistry added.
UK ‘just not attractive’ for hotel investors
Intercontinental Hotels Group (IHG) is listed on the FTSE 100 and operates 384 hotels in the UK, across brands including Holiday Inn, Six Senses and the Vignette Collections.
Mistry said that IHG’s franchisees and investors have warned that the tourist tax, along with the rising business rates burden, are making the UK’s hospitality market less viable.
“That has definitely been the feedback that we’ve had from a few of our investors, who have said that it’s just not attractive for them to invest in the UK, given all of the varying costs that keep being piled on.
“For them to come to market, find a conversion, make it work for them and get a sensible return on investment – it’s becoming harder and harder for them to do that within the UK market,” she said.
The UK’s first tourist tax came into effect in Edinburgh in July. Local authorities in England will be able to charge visitor levies from April next year.
Initial plans for the tax would have given only regional mayors the power to impose a tourist tax in their area, but Andy Burnham has paved the way for all strategic authorities in the UK to charge the levy.
Mistry criticised the government for not setting out clear plans for the tax. “We’re really unsure of what that looks like, and so we continue to engage with the government on being really clear about the impact of it and trying to minimise whatever components are put in place,” she said.
The IHG boss said office conversions have surged in popularity for hotel investors in recent years, amid surging demand for luxury hotels in London.
Four in five (78 per cent) of IHG’s new hotel openings in the UK and Ireland have been office-to-hotel conversions so far this year.
A quarter (26 per cent) of the new rooms IHG has opened in London this year have been in the luxury sector. Mistry said corporate travel into the capital has driven “resilience” in IHG’s luxury hotel arm, despite rising concerns among consumers about the cost of living.
Constructing hotels out of old offices in London allows investors to “scale across different segments, different markets, different cities, and to be able to do that quickly,” she said.
The government’s consultation on the overnight visitor levy closed in February but ministers are yet to publish their response.
A government spokesperson said: “The levy will help ensure local people and economies keep more of the rewards and invest in what matters most to their communities, including reinvesting back into tourism.
“Similar levies in other countries typically add only a small amount per night and evidence suggests that they can have a limited impact on visitor numbers and jobs.
“Local leaders will need to consult with their areas before introducing a levy, and we’re listening to businesses to make sure money raised is invested effectively.”