Leading hoteliers have added their weight to the industry criticism of the Government's decision to cut VAT but increase duty on alcohol in Monday's Pre-Budget Report.
While pub industry leaders have slammed the Government for excluding pubs from the benefit of the VAT cut to 15%, Ajaz Sheikh, director of food & beverage at the Lanesborough hotel in London said the cut itself could prove troublesome.
"The VAT reduction will have a huge impact on the hotel industry and is placing pressures on us at our busiest time of year," he said.
"The cost of re-printing menus and brochures will run to tens of thousands of pounds and is a huge additional expense for a financial move that has been introduced as a 12- month measure aimed at driving short term retail sales."
Gerard Basset, founder of Hampshire hotel TerraVina, said he was sceptical that the VAT reduction will help small businesses.
"Will a 2.5% increase stimulate spending amongst our customers? I don't think so," he said. "And the fact that it is a temporary measure means a huge amount of administration and expense to implement the cut. We will of course pass on the reductions to our customers, but only if our suppliers change their prices."
Basset said the government should consult more with small businesses to understand what they really need. "These cuts seem to be taken out of the air to make headlines without real consideration for the businesses they will affect," he added.
By Daniel Thomas
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