Chef Chris Staines and his partner have told guests at their Devon hotel and restaurant that they "really need" the VAT cut after repeated requests for discounts following the chancellor's announcement.
Staines and partner Silvana Bandini, who own the 13-bedroom Ollerod hotel and restaurant in Dorset, said the VAT cut could give an industry "on its knees a fighting chance" as they explained they would not be passing on the reduction.
In a letter to "guests, friends, followers and colleagues" the first-time business owners, who had been trading for less than two years when Covid-19 forced them to close for 106 days, explained that they had been unable to access grants after being classed "too big", instead having to take out a bounce-back loan as well as as borrow money from family, all of which will have to be repaid.
The pair described the VAT reduction as an "incredible initiative" given the myriad of financial pressures their business is facing.
Bandini wrote: "They [the government] understood a huge number of hospitality jobs were at stake if something wasn't done.
"The VAT reduction has been put in place to support an industry on its knees, and to give its businesses a fighting chance to get through this.
"The Ollerod is not reducing its room rates, food prices or non-alcoholic beverage prices. They will remain as they are, and we will very graciously take the lifeline that is so generously being given to us."
She added: "We don't have a board of investors behind us, or a billionaire backer, or a substantial bank balance. It's just Chris and I, and all of our hard work over the past two years.
"Reducing our rates doesn't ensure that our guests will spend more with us; the 'saving' made could be spent anywhere, or not at all. This means that we potentially won't benefit from an initiative that was created to bolster and support our industry.
"We really do wish we were in a position to pass the reduction on – the past months would have been a lot less stressful if we were, however the reality is that we're not. We, and multiple other hospitality businesses, really need this now.
"If you are disappointed or feel we are being greedy by ‘keeping' the 15%, then we are sadly not the place for you."
The venue is not the first to receive requests about discounts. Peter Banks, managing director of Rudding Park in Harrogate, told The Caterer last week he had received similar requests.
The question of whether to pass on the VAT cut has divided the industry, with some larger businesses choosing to pass it on to entice guests through the door while for others it has acted as a lifeline to keep trading with reduced covers.
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