Hospitality Industry Could Lead Economic Recovery

Last year, Prime Minister David Cameron placed the hospitality industry at the heart of the UK’s economic recovery. With a package of high-profile events in the pipeline, including the Queen’s Jubilee and the 2012 Olympic Games in London, hospitality is well-positioned to lead the UK economy away from recession.

In fact, a new report by Oxford Economics, Hospitality: Driving Local Economies, commissioned by the British Hospitality Association, acknowledges that the hospitality industry can create 475,000 jobs by 2020 if barriers to growth are removed.

The report, which identifies the hospitality industry's contribution to each of the 406 local authorities throughout the country, says that the hospitality industry directly employs 2.4m people and contributes over £46 billion in wages and profits (Gross Value Added) to local economies every year. However, growth in the UK’s hospitality industry is hindered by Britain’s lack of price competitiveness – ranking only 135th out of 139 countries in the World Economic Forum’s Travel and Tourism Competitiveness Index.

Factors that inhibit the price competitiveness of the UK’s hospitality industry include Air Passenger Duty, visa controls and the higher VAT rate – possibly the biggest bone of contention for UK hotel industry in many years because on the continent all but two EU member states have reduced VAT on accommodation and attractions.

The report notes that a number of local authority areas, including Westminster, Kensington and Chelsea, the Isles of Scilly and areas in Cumbria have a high proportion of staff employed in the hospitality and tourism industry and are very reliant on the success of these industries for growth.

Stephen McCall, managing director UK and Ireland, InterContinental Hotels Group, said that hotels had a huge role to play in job creation and economic development in local communities.

"The BHA's report reinforces what we have known for a long time. With 269 hotels in the UK, we are creating 3,000 jobs in this country over the next few years. We want to do more. We want government to address the issues raised in the report so our sector can start delivering the job-fuelled recovery the country so desperately needs."

Evidently, the UK hospitality industry does have the potential to lead economic recovery, but growth can only be triggered by policy and legislative changes in Whitehall.

The industry has the appetite for growth but does the government?

Check out the whole report at the British Hospitality Association website.