Month: May 2021
Next manager’s meeting and more
I thought destination mangers might like a little light relief from the daily grind of managing the issues of increased volumes of visitors against a background of restrictions on the volume and value for individual businesses. This weekend, the first Bank Holiday with the majority of business open and most people allowed to travel will be a real test of business resilience, destination management and the patience of a host of visitors which will include some new to the ways of the domestic industry and some might even suggest to the ways of polite UK society.
I am very aware that there are real background concerns and uncertainties surround what the 21 June, the target date for a further return towards “normality” and, particularly, the fact that this uncertainty will last until at least 14 June. This wouldn’t be as much an issue if it were not for the growing concern about increasingly established new variants in certain areas of the UK. One of the issues to be discussed at next week’s destination mangers meeting (more on that below).
As to the light relief I have shared a quick note with colleagues in UK Beach Management Forum about developments around “bathing rivers” of which the UK has none and only one newly established riverine bathing site on the Wharfe in Yorkshire. The growing popularity of wild water swimming combined with environmental commitments to tackle serious issue with river water quality make it almost a certainty that demands for cleaner inland rivers and the reassurance of bathing water status to go with it, will increase exponentially. That brings with it some real and potentially different challenges to those already experienced at traditional coastal of lake based site that are operated on the presumption of high volume usage, at best May to September only.
I guess my point here is that bathing water quality and the associated management of the PR pitfalls is likely to visit itself on many more UK destinations, both inland and coastal in the next decade, than it has done for the last (45 years) since it became EU prompted issue of bathing water quality in the mid 1970’s. I also suspect that it may change public understanding of bathing waters and the current single sample point, 20 tests per session regime which is at best indicative of likely standard, not a guarantee of actual quality here and now. If you have a river of any consequence, or existing coastal or inland lake bathing waters in your patch then see more via the UKBMF site at: https://ukbeachmanagementforum.wordpress.com/latest-news-and-posts-from-ukbmf/
And finally the real point of this up date is to remind all members that the next destination managers meeting, mainly to update progress in stage three and discuss prospects and actions needed for stage 4 and beyond, is programmed for 2pm Thursday 3rd June. Despite best efforts, I keep missing people who have previously participated off the invitation email distribution and don’t necessarily invite all those other welcome to attend but who may not have joined in with this invaluable national updating process. If if you wish to attend and have not had the diary invitation and link (hosted for me by Mark Catherall Sefton Council and therefore from his email address) yet then please email me at firstname.lastname@example.org . Happy to consider request from non-member guests where it adds mutual value. Please feel free to ask.
Taxing times ahead for tourism
In the absence of anything substantive to say yet about today’s Queen’s Speech, there are a few outstanding items on UK tax and tourism from March’s Budget, its related follow-on taxation announcements and general speculation since that I feel I ought to raise with colleagues:
1. There are a few tourism related Budget tax announcements that have yet to come to fruition. Proposals to adjust Air Passenger Duty (APD) for international travel and a fundamental review of business rates have yet to be consulted upon or, in the case of the latter, is a work in progress, due to be concluded this Autumn. The third and probably the most pressing is the agreed, staged return of VAT on tourism services to 12.5% from 30 September 2021 and then back to 20% from 31 March 2022.
While the extension of the reduced rate of 5% was in the circumstances most welcome, the strategic and operational impacts of the first increase coinciding, as it will, with the end of main summer season and a return to what should, at least in normal times, be the domestic shoulder months, heading rapidly towards off season, is concerning. On reflection it could have been better timed, although whenever it came it still would be unwelcome.
Given it was a firm commitment in the Budget itself, there is now very little prospect of a change of direction, unless something untoward occurs in the interim. Something significant enough to force a change now, isn’t something any of us would wish for. We must also reluctantly accept that the announcements on VAT marks the end of the passing opportunity to secure a permanent lower rate of VAT for tourism services, off the back of Covid-19. Having lost that opportunity, a stronger more persuasive case is unlikely to emerge in the immediate or foreseeable future. I hope I am wrong in this my personal assessment.
Meanwhile, although it is just under 5 months before the first VAT increase, there is very few overt signs that individual businesses are yet considering the practicalities for their own business, let alone the combined big picture impacts on “the industry”. In part that might be because the practicalities are potentially both contentious and complicated and will vary greatly from business to business, depending largely on how they handled the original 15% “discount”. I.e., retained, shared or passed it on in full and multiple variations on those themes. Those businesses that took the easy route and simple retained their original prices and kept back the additional 15% to offset their own costs, probably have the easiest choices and the simplest solutions available to them. For others it could be far more difficult in practice or from a PR and sales prospective.
To my mind advising hospitality businesses on what to do about the impending VAT increase is not in the remit of the destination manger’s, but reminding businesses that, in some case, it will need very careful consideration and doing so well before the implementation date of 30 September might be of mutual benefit? As might reminding them that whatever they do in September will be impacted by, or have impacts upon their choices of how to handle the subsequent increase on 31 March 2022. I am sure larger businesses and most of more proactive accountants will already be all over the issues. My immediate concerns lie with some of the struggling SME’s and micro businesses who may not have ready access to professional advice and may need prompting to seek it. That said a proportion of the very small operators of course will not be registered for VAT and so dodge the problem entirely. The original HMRC update can be accessed at:
2. In the post-budget “Tax Day” announcements, there were brief references to the intention to clamp down on abuse of self-catering holiday let rules in England. There was very little detail given; essentially the moves appear to be aimed at second and holiday home owners who have deliberately reclassified their properties as holiday lets, thus paying no Council tax and, in many cases, also falling below the threshold to pay business rates but who have little or no intention of advertising and renting the property for the requisite minimum period which for England is currently available for 30 and let for 15 weeks a year. To what degree, by whom and how abuses are to be pursued, whether there are any thoughts of retrospective penalties and, now, any implications that might have for what are alleged to have been significant and morally unjustifiable, automatic payments of business rate related covid-19 support grants, remains to be seen.
Thus far, HMRC’s comments are confined to: “Strengthening the self-catering accommodation criteria for business rates – The government will legislate to change the criteria determining whether a holiday let is valued for business rates to account for actual days the property was rented, following a previous consultation. This will ensure that owners of properties cannot reduce their tax liability by declaring that a property is available for let while making little or no actual effort to do so. Further details of the change and implementation will be included in the Ministry for Housing, Communities and Local Government’s (MHCLG) response to the consultation on the business rates treatment of self-catering accommodation which will be published shortly”.
MHCLG do appear to be dragging their feet on publication of the consultation findings (consultation late 2018 early 2019) and the details of how they intend to plug this particular local and national taxation loophole. Whenever the announcements come, they are likely to be of significance, in particularly for rural and urban honeypot locations and other areas especially popular with both holiday home and self-catering, furnished holiday letting owners. It is to be hoped that genuine tourism businesses will not be adversely affected, while those blatantly playing the system are robustly and effectively brought back in to line. Achieving that difficult balancing act may be what’s delaying the MHCLG pronouncements?
Forewarned is forearmed as any announcement made, with the summer season fast approaching, are bound to provoke reaction from the media whatever their intent and their impacts may be. The quote above, paragraph 3.4. page 8 is the sole reference in the HMRC announcement of 28 March. Business rates and APD are discussed at paragraphs 3.2. and 3.3. respectively of the same page of the document: Tax policies and consultations – Spring 2021 (publishing.service.gov.uk)
3. Looking much further ahead towards the 2030 and the impending ban on the sale of new fossil fuelled motor vehicles, there has been ever increasing debate since last October about the Government’s financial need to move away from fuel duty to a pay by the mile system, in order to preserve tax revenues in the new age of electric motor transport. The reality is of course that effectively we already pay by the mile driven by dint of the fact that the further you go the more fuel you use and the more duty you pay. It just isn’t that blatantly obvious to us all that that is the reality. There are of course choices to be made about the size and type of vehicle and thus fuel consumption. Nonetheless, I would suggest that few if any of us actively consider the distance, cost ratio when travelling anywhere in what is in effect a pre-journey pre-payment system. If and when we are asked to pay a recognisable and easily identified tax charged by the mile, for each mile travelled, as we travel or soon after, then attitudes to journey distance and destination choice may well change? Equally it may just be accepted as the price you pay to drive, just as the eye watering cost of fuel (due largely to the duty added) has become?
Its potentially a decade off but could come much sooner in certain urban areas or for certain types of vehicle everywhere. If and when it comes, how will it impact of travel choices and, in particular, on discretionary travel, of which leisure and tourism are currently especially, arguably in many places entirely, dependent? I don’t suggest it is something we should be worrying about on a daily basis. However, like the subject of the provision of either: adequate charging points for unpredictable peaks of mass car borne visitor demand, finding alternative means of transporting tourist in volume to popular destinations, or in the worst case finding new purposes for those popular tourist destinations in future denied access to visitors in numbers as a potential consequence of a demise in the ownership and us of the private car, it should be up there as one of those big strategic questions. Questions that are best asked and debated now while there are still opportunities to influence general direction and not just left, as normal, to the time when it is all too late and it has become a matter of addressing the detailed, unintended consequences.
Of all the areas of Government policy, transport and anything that has to do with the cost or means of either public or private transportation is absolutely central to tourism. Anything, including taxation, that limits travel, also directly limits tourism and directly restricts and curtails the visitor economy. If you doubt it witness the impact of travel restriction on the visitor economy in 2020/21. Sadly, anything to do with travel for “discretionary purposes” like leisure and tourism, feel like it remains firmly relegated to the third-class carriages when it comes to DfT policies and priorities. This is compounded by the fact that if it is has anything vaguely to do with transport DfT take the lead in Westminster, not DCMS, regardless of the relevance of the transport issue to tourism. That isn’t a criticism just a statement practical reality and one we all need to recognise and work around; just as we need to recognise that anything to do with tourism taxation, still needs to be raised with DCMS and supported by them but ultimately addressed directly to Treasury who will make the decisions that count.
Looking forward to Summer 2021(?)
The first bank holiday of 2021 with at least some hospitality and associated businesses open, proved to be bit of a mixed bag, not least because of poor weather towards the end of the long weekend and the unavoidable focus on outdoor activities and hospitality. Business forecasts for the a domestic staycation summer remain positive, however, there is still a degree of potential for confusion around the age old dilemma of balancing necessarily positive public marketing messaging and the business and practical realities. How much of the forecasted business is actually booked and secured and how much of it hoped for and potentially still at risk to outside influence?
Today there has been a great deal of speculation around the opening up of near European and some other international destinations to UK domestic outbound leisure travel prompted by comments and statements from Westminster and EU Governments. Again, it is always difficult to judge to what degree that will transcribe itself into a relative trickle or a masses exodus. Practicalities and timings suggest the chances of a return to anything near pre convid-19 outbound international travel during the main summer school holiday period are at best remote. Late 2021 overseas holidays, for those in a position to travel in school term, are perhaps a different proposition, as are prospects for 2022 and beyond.
The levels of vaccination rollout in the host countries and the presumption that increased levels of UK infections and/or the transmission of new variants will not be adversely impacted by domestic overseas leisure travel are perhaps key to if, when and at what rate outbound international travel will recover and the first and subsequent order impacts that will invariably have on the still struggling domestic tourism industry. Ultimately it will take several years of bumper main summer seasons at home (or abroad for the outbound operators) to compensate and paydown accumulated debt arising from lost business from March 2020 and, lest we forget, in many cases, still ongoing.
Last week’s comments from the CEO of Whitbread which were largely picked up in business pages, where particularly revelling. Given the ubiquitous nature of their accommodation and hospitality products, its popularity across mid-range business and leisure markets and the sheer scale of this publicly listed company, I am inclined to look to their comments as an accurate and honest, bellwether for much of the popular domestic industry (Whitbread can hardly risk overstating their market performance for marketing purposes): https://www.bbc.co.uk/news/business-56898843
Last week saw the deadline for the DCMS DMO review submissions. This isn’t the end of the process and we can now look forward to the review team publishing its findings and consulting further in we understand a series of regional meetings. The timeframe is likely to be very short with next steps in late June early July. Colleagues are urged to continue to actively engage in the process and be ready to react to short-notice opportunities during what is going to be an increasingly busy period for all destination managers. The submissions were important, the findings, whatever they may be, absolutely critical to the way destination management develops within England over the coming decade. Unfortunately, it isn’t a simple issue and on balance the opportunities to get wrong are probably greater than the opportunities to get it perfectly right for every destinations of any significance in England. For those who are interested our submission and that of the Tourism Alliance can be accessed at: https://britishdestinations.net/consultation-responses/open-consultations/independent-review-of-destination-management-organisations-dmos-consultation-closes-28-april-21/
Any additional local intelligence on current and future predicted performance that you may have from your own destinations would be most welcome. It not only help us better understand the emerging situation but also allows us to communicate that to other key trade partners and to National Tourist Boards and National Government across the UK.