Trading in the hospitality industry is going to be a lot tougher this year than in 2009, warned Bob Cotton, outgoing chief executive of the British Hospitality Association (BHA), in a speech this morning to the Vantis Annual Hospitality & Leisure Seminar with the BHA.
Cotton said that while last year was a relatively good one for hospitality, compared with other industries such as construction, business in 2010 was going to be more problematic.
"We started the year very well with turnover levels during the first quarter around 3-4% ahead, year-on-year, but I've noticed a distinct change throughout the industry over the past six weeks," he said.
"Business was down 18% for some operators as a result of the volcanic ash and the past two weeks have been difficult. The election campaign appears to have undermined consumer confidence, with people steadying up on their spending,
"In particular, consumers are trading down on beverages by 3-5%. The hardest-hit restaurants are those in the mid-market sector, while the value outlets such as McDonald's, Burger King and Pizza Hut, and London's fine-dining establishments appear to be holding up well."
Cotton's concerns for the future include the tourism infrastructure, an expected rise in VAT and public expenditure cuts.
He said he was uncertain what the new Government's plans were for the Regional Development Agencies, which, if they lose their tourism remit, will bring the regional tourism boards under closer scrutiny.
An increase in the rate of VAT to a possible 20% will be very difficult to contest, Cotton said. "This is an easy way for the Government to raise money and with £20b in VAT currently being collected by the hospitality industry it will be an impossible task to try and get a reduction in VAT as happens in French restaurants and German hotels, which both operate a 5.5% VAT rate."
Cotton ended his speech by saying that proposed public expenditure cuts would hit the hospitality industry particularly hard in the North, where many operators relied on an enormous amount of business from education and health authorities.
By Janet Harmer
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