Autumn Statement 2011 - hospitality sector perspective

5 Considerations for the Hospitality Sector

As the UK economy recovers from the severe financial crisis, what implications does the Autumn Statement 2011 have for the hospitality sector? We have highlighted five announcements that might be of interest.

Impact on Profitability

1. Fuel Duty

The planned increase in fuel duty of 3p per litre has been deferred to 1 August 2012, and the 5p planned increase in August 2012 has been scrapped.

Good news potentially, as customers/guests may be more willing to travel.

2. Air Passenger Duty  (APD)

Increases to APD from 1 April 2012 and 1 April 2013 are proceeding as previously announced.

The cost of APD along with above average VAT rates (compared to the rest of the EU) are highlighted by the British Hospitality Association as factors that effect the UK hospitality industry’s competitiveness.

3. Trainee staff costs

The Government will introduce a ‘Youth Contract’ to tackle the growth in youth unemployment. Amongst other measures are an estimated 160,000 wage incentives of £2,275 to take on young people and 40,000 incentive payments for all firms taking on apprentices.

This provides hospitality businesses with an opportunity to take on trainees in a cost effective manner.

Impact on Funding

4. National loan guarantee scheme

This provides funds of up to £20 billion of guarantees for bank funding over 2 years.

Potentially useful to enable businesses to complete the refurbishment or acquisition that they have been planning.

5. Enterprise Investment Scheme relief for hotel investments

This is still to be confirmed by HMRC – but was reported by Caterer and Hotel Keeper. We have asked the British Hospitality Association for more information.

Per the article, the restriction on investment in hotels will be removed from 6 April 2012. There will be a £12m gross asset rule. We will provide more detail in due course.

This move will be of interest to hotel developers looking to finance smaller hotel investment projects.

If you would like to discuss any point raised in this article, please get in touch with your usual Johnston Carmichael contact, or one of our Hospitality & Leisure specialists.

Toby Rintoul, Head of Hospitality & Leisure. 0131 220 2203. toby.rintoul@jcca.co.uk