Quarter of UK hoteliers absorb VAT increase, finds survey
The Hotel Confidence Monitor Q1 2011 surveyed general managers from 267 hotel chains around the country.
Although hoteliers were on the whole more confident about their business prospects than last year, the varied approaches to dealing with the VAT increase indicates a environment of continued uncertainty.
Overall, 74 per cent of respondents to the HotStats survey said they would be passing on the VAT increase to customers.
Out of these, 53 per cent of general managers in London intend to pass on the full increase while 27 per cent will absorb a portion of the increase. Hoteliers in the provinces are less able to get away with higher room rates, and this is reflected in their actions on VAT: 39 per cent will try to pass on the full increase, while 35 per cent hope to take on a portion of the hikes.
“Confidence levels and performance expectations are beginning to improve, albeit gradually, but we will see soon whether the VAT increase will have a negative impact on the UK hotel market.” said Mark Dickens, managing director of HotStats.
Higher confidence… in London
When asked about their business outlook for this year, a third of hoteliers said they were more optimistic compared to the last quarter of 2010, particularly in London.
Around 63 per cent of hoteliers in London said they were expecting an increase in occupancy in the first quarter of 2011. On the other hand, hoteliers in the provinces still remain cautious about their outlook, with only 47 per cent expecting improved occupancy performance, and 28 per cent forecasting a decline.
In line with this, gross operating profit expectations are higher in London than in the Provinces, with 63 per cent of London general managers expecting an increase and only 32 per cent of Provincial general managers expecting an increase.
When it came to staffing, the large majority (87 per cent) of both London and Provincial hoteliers said they do not expect to reduce staffing levels over the next three months, which is a marked improvement compared to the last HotStats survey of 2010.
