The BHA’s recent publication British Hospitality: Trends and Developments 2009 highlights the fact that Britain’s hotel industry is continuing to invest in new hotels – nearly 11,000 new rooms will have opened in 2009, adding to the 73,000 which have been built since 2002.

This is an impressive number but, in an industry largely made up of independent operators, future much-needed investment – indeed, the existence of many existing hotels – is currently under threat.

The threat comes from three quarters.

1. The reduction in capital allowances and the phased abolition of the Hotel Buildings Allowance, announced by the Chancellor in 2007, which has greatly discouraged many independents from re-investing;

2. The recession, which has driven down occupancy levels and revenues, particularly from the corporate sector, with a consequent loss of jobs;

3. Government actions (some listed below) which are driving up costs just at the time when businesses can least afford to pay them.

For example, despite some transitional relief (in England only) business rates are set to rise significantly next year – in some cases by as much as 30 per cent. This is not the time to be putting on cost burdens which, in some cases, may well run into five figures.

Relentless increases in the National Minimum Wage are driving up the wages of workers higher up the scale. In an industry where payroll costs comprise between 30-40 per cent of revenues, the result of these increases is that jobs are being lost because prices cannot be increased to cover increased wage costs. What’s more, the planned increase in National Insurance contributions in 2011 will raise payroll costs yet again, further endangering jobs.

The planned smaller company taxation rate, due to rise to 22 per cent, will affect hospitality more than most industries because of its small business structure. Meanwhile, the return of VAT to 17.5 per cent will deter consumer spend just at a time when it needs to be encouraged.

The tourism industry is the main economic driver of many regions of the country, employing over 2m people, but these actions will only endanger its job creation capability and its future profitability. They are totally inconsistent with the stated government aim of helping to generate the country’s economic recovery. All they do is to raise costs, reduce investment and put jobs in peril.