HBA tax estimated to cost Best Western Hotels £80 million
Best Western, Great Britain’s largest group of independently owned and managed hotels, have today predicted that member hotels are set to be taxed an additional £80 million, following the Chancellor scrapping Hotel Buildings Allowance (HBA).
The hotel group reveals the staggering findings after employing independent financial consultants to investigate Gordon Brown’s tax burden on its 292 hotels across England, Scotland, Wales and the Channel Islands.
The survey, taken by Best Western hotel owners, investigated the accumulative cost to those who have invested in their properties. From this, the likely tax increase was estimated in order to prepare hoteliers for the anticipated extra cost due to be incurred.
The results are clear. Due to the significant investments in refurbishments, renovations and extensions in recent years the cost is set to average at almost £30,000 per hotel. Previously this cost could have been offset against future profits. However, as of 2009 this will no longer be the case.
With independent hoteliers already feeling the pinch against big chains, this new taxation is sure to hit these hoteliers harder than ever before – especially those who have already spent money on renovations and are now faced with an unexpected tax bill.
As a result, Best Western are set to fight the independent hoteliers corner and are backing the British Hospitality Association’s campaign to stop the Government abolishing this crucial tax relief on the industry.
Talking about the imposing tax David Clarke, Chief Executive, Best Western Hotels GB said: “When planning buildings and fittings projects to date all hoteliers, not just Best Western, will have budgeted around this tax relief. For the Government to take this away after the project has been completed is extremely unfair on the tourism industry.”
“This is why we are urging all independent hoteliers and members of the public to join with us in supporting the British Hospitality Association’s campaign to stop this from happening.”
“We are as ever hopeful that the Chancellor will see the detrimental effect this will have on the tourism industry and revoke the decision before it takes affect. In the meantime, at Best Western, we are working closely with our members to both guide them through this taxation and aid them in optimising sales to try and offset this increased cost.”
With the British Hospitality Association anticipating that the cost to the tourism industry is likely to reach £500million, the Chancellor’s decision is sure to affect job opportunities and future regeneration in British hotels – something that the Government feel strongly about investing in.
Bob Cotton, Chief Executive, British Hospitality Association said: "The government's decision to abolish HBA could not have come at a worse time as hotel extensions and improvements are essentially a long-term commitment; at the same time, the decision to reduce the allowance on buildings already in construction flies in the face of both fairness and good sense.”
"Investment in provincial towns and rural locations is particularly at risk. Unfortunately, these are the very areas of the country where the government wants us to generate job opportunities.”
"It is mystifying that the withdrawal of the HBA was made without any discussion with the industry - yet it will affect developments which, in many cases need to be financed over a period of many years. We are continuing to lobby Treasury officials to express our deep concerns about this damaging decision and the BHA entirely endorses Best Western's campaign."
If hoteliers would like to join the ever expanding number of hotels already in Best Western membership please contact the membership department on 01904 695460.
Case study
The Best Western Premier Yew Lodge is a family owned hotel based in Kegworth, near East Midlands airport. This hotel has been in the family for over 50 years and has been managed by three generations.
Starting out as a tearoom over 50 years ago the hotel has grown from strength to strength and now boasts 87 ensuite bedrooms and employs 97 members of staff.
In 2003 the hotel underwent an extensive extension and refurbishment programme building 36 ensuite bedrooms, nine conference rooms and a health club and spa.
When outlining the financial plans for the development the IBA tax relief was a crucial element of the budgeting. The hotel spent a total of £4 million on the project and in order to ensure that the expense would be justified and profitable the plan was to offset the cost against future income at the hotel.
Now that the Chancellor has scrapped this tax relief the hotel are facing a heavy tax bill which had not been anticipated.
Jeremy Pick, hotel owner of the Best Western Premier Yew Lodge, said: “Investing in the hotel is an essential part of maintaining the high standards that we are so proud of. Without doing so the hotel would not be able to generate the sales and consequent revenue to continue running the hotel.”
“The decision by the Government to take away the tax relief on building and fittings for hoteliers is worrying for the industry as a whole. At the hotel we have invested heavily keeping our hotel up to date and now are being penalised for doing so.”
“It is unfair of the Government to apply this tax after the event has already occurred and if hoteliers, like myself, had been aware of the cost at the time of the investment financial plans could have been developed differently to allow for this.”
For more information on Best Western hotels log onto www.bestwestern.co.uk or contact 0845 33 00 120.
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Notes to Editors:
· Images are available on request.
· Best Western is the largest group of independently owned and managed hotels in Great Britain. As part of the consortium, member hotels are able to maintain their own charm and personality whilst benefiting from marketing activity only available by joining with like-minded independent hoteliers.
· Best Western Hotels GB is part of the world’s largest global brand of over 4,100 hotels in 80 countries.
· Best Western provides national and international marketing, sales, distribution and central reservations for its member hotels, along with purchasing, training and IT support. Details of all hotels are available on www.bestwestern.co.uk
· Best Western has 292 hotels across England, Scotland, Wales and the Channel Islands offering unrivalled choice for conference and meetings, corporate accommodation and leisure facilities.
· Best Western has more hotel restaurants with AA rosettes than any other hotel group in the UK.
Further information, images or an interview, please contact;
Mikhaila Brentnall,
PR Manager, Best Western Hotels GB
Mikhaila.brentnall@bestwestern.co.uk
01904 695426