Why are we so expensive?

Peter Hancock, chief executive of the Pride of Britain consortium, examines the issue of costs in the UK for both guests and hoteliers.

Have you ever settled your bill at a UK hotel and thought, "Blimey, for that I could have had a week in Spain."

Britain's hotels may seem hopelessly overpriced to holidaymakers returning from much cheaper overseas destinations and it's true that the better hotels in Britain are far from cheap. However, people seldom compare like with like, for example, a five-star London hotel costs no more to stay in than its equivalent in Paris.

A question I am often asked is "how can our hotels justify charging so much?" It isn't just the room rate and the cost of dinner. The mark-up on wine seems to be a particularly thorny issue for some, occasionally giving rise to the accusation of greed on the part of the hotelier.

The fact is, hoteliers can only charge for a tiny number of the goods and services they have to use. There is nothing on the customer's bill for interest payments, staff recruitment charges, roof repairs, the new boiler or sky-high insurance premiums. No specific charge is made for gas and electricity or training. And the finer the hotel, the more these things will have cost.

Add to that the cost of meeting ever-changing health and safety laws and you begin to see what excellent value a top British hotel experience can be. In countries where the cost of living is lower than here, hoteliers will tend to pay less for the buildings themselves and for the staff who manage them.

But there is more. In Britain a litre of petrol costs about £1, of which 64p is tax. This affects the delivered price of everything from lobsters to light bulbs. We also have relatively high duty on alcohol and relatively high VAT. These are inescapable disadvantages for the UK hotelier compared with many of his foreign counterparts and yes, you guessed it, the customer foots the bill eventually.

Finally, we mustn't forget the cost of sale. Unless one is very lucky, customers don't just turn up. Marketing takes around 4% of a typical hotel's turnover, aside from the salaries paid to any sales executives. Travel agents require their commission, consortia their fees, guidebooks their inspection charges, and newspapers and magazines are not charities either. It all adds up, yet never features on the menu, the wine list or the room tariff.

So let's not be too quick to assume that hoteliers are ripping us off. I know plenty who work much harder than is good for them and who have woken up in the middle of the night in a cold sweat when things weren't going so well.

A luxury hotel makes money when it's full, but it leaks like a sieve when occupancy is low. And the best places to stay are the ones that make a profit because that enables them to invest in improving the guest experience with new facilities, better furnishings and the best people.

Running a good hotel is an expensive game. It costs more in Britain than in many other parts of the world because of all the components I have mentioned, and others besides. And those who still manage to make a profit have the pleasure of handing over a nice slice to the chancellor, without doubt the single greatest drain on all our resources.

It intrigues me that our government is constantly being pressed to do more for tourism when the most helpful thing it could possibly do is less.