End of tax-free shopping for tourists ‘would cripple hotels’

Hannah Uttley
·1 min read
Claridge's - Keith Mayhew
Claridge's - Keith Mayhew

Scrapping tax-free shopping for overseas tourists will risk “thousands of jobs” and cripple the hospitality industry, a group of the UK’s top luxury hoteliers have warned.

Bosses from some of the UK’s most renowned hotels including Claridge’s, The Connaught, Rosewood London, and the Mandarin Oriental said proposals to axe the incentive will undercut Britain’s competitiveness compared with its nearest European neighbours.

The Chancellor has suggested scrapping the 20pc rebate for overseas visitors in an effort to bring the UK in line with other systems after Brexit. The Treasury has also said the current system is too costly and susceptible to fraud and claimed extending the rebate to the EU after Brexit could increase total costs up to £1.4bn a year.

British hotels are expected to suffer an average occupancy rate of just 45pc in 2020 and 2021, while London hotels will suffer a slump in revenue per room not seen since the Seventies, according to findings from PwC.

The accounting firm has warned that the UK hotel industry could take four years to return to the levels of business seen in 2019, even if an effective vaccine is rolled out in the next few months.

Sir Rocco Forte whose hotel group includes Brown’s in London and The Balmoral in Edinburgh called the proposed move “a huge mistake”.

“With Brexit taking place and our wish to create a more attractive and competitive trade environment, this is a step in the opposite direction,” he added.

Kate Nicholls of UKHospitality, said: “This is a bad move by the Treasury.”