Pre-Budget briefing
PIFs or REITs
Hotel experts gave a mixed response to the omission of property investment funds (PIFs) from Chancellor Gordon Brown's pre-Budget speech.
PIFs - known as real estate investment trusts (REITs) in the USA - are property-owning companies open to tax breaks and small investors. The much-called-for creation of a separate asset class for hotels would herald a new investment model and speed the separation of operations from property management and ownership.
However, despite clamour from within the industry and a lengthy consultation process earlier this year, the Government remains reluctant to extend the model to the leisure sector. Any new PIF legislation will not now come until July 2006 at the earliest.
Charles Romney, hotels partner at CMS Cameron McKenna, said the lack of information on PIFs and the failure to extend the model to hotels was "disappointing, to say the least", but added that he was not greatly surprised.
"It has all the hallmarks of political back-pedalling," said Romney. "The Treasury has always been suspicious of REITs, and this could be a way of kicking them into touch."
However, Rob Seabrook, executive vice-president of Jones Lang LaSalle Hotels, was more positive.
"While it is not great that REITs were not mentioned, my view is that it's good news for the sector, as hotels were not going to be included in the Government's original proposals on the subject," he said. "This gives us more time to lobby the Government so we are included."
Seabrook's comments were echoed by Jonathan Langston, managing director of hospitality consultants TRI.
"Now we have time to put our case," said Langston, who called it "a blessing in disguise" for the hotel industry.
"Provided the PIF legislation is framed to include the leisure sector, hotel operators are anticipated to be winners. But it is also clear that the level of success hinges on getting the details of the new law right."
Maternity leave The Government's plans to increase paid maternity leave from six to nine months, with the option to transfer leave to fathers, have caused concern in the industry.
Martin Couchman, deputy chief executive of the British Hospitality Association, said the move would create staffing problems and administrative costs by forcing firms to get temporary cover for absent staff and keep positions open for returning employees.
The Federation of Small Businesses (FSB) said the proposals had clearly been made with little thought about the impact on small employers.
"The administration of maternity leave is already a headache for small firms, and the proposed transferability of maternity leave will make this worse," said Simon Sweetman, vice-chairman of the FSB's taxation committee.
Other measures
Red tape Gordon Brown's plans to introduce a system of revisiting and reassessing regulations once they had been introduced fell short of industry expectations.
Martin Couchman, deputy chief executive of the British Hospitality Association, called on the Government to cut the amount of red tape hampering businesses. He pointed out that if the Government didn't keep introducing new legislation, it wouldn't need to review it.
Hampton review Industry groups broadly welcomed Philip Hampton's review of the 350 different inspection bodies for small businesses, in which he called for the complex system to be simplified.
Fuel duty freeze The Government introduced a freeze on the payment of fuel duties - good news for hospitality businesses, although the impact will be minimal due to the current high oil price.
National employer training programme The British Hospitality Association praised this scheme - to be introduced by 2006-07 - aimed at building on the existing employer training pilot schemes. The programme, which subsidises the cost to employers of training employees with no qualifications to at least NVQ level 2, will remain voluntary for employers.
