As the major holiday season gets underway, and mindful of the General Election campaign, the Committee of the Tourism & Hospitality Special Interest Group (SIG) of the Institute of Chartered Accountants in England & Wales (ICAEW) launches the results of a wide ranging member research survey undertaken amongst chartered accountants working within the tourism and hospitality sectors, or whose clients are in these sectors.
The Tourism and Hospitality SIG is made up of members of the ICAEW working within the tourism and hospitality sectors, and its Committee is chaired by Geraint James, Finance Director of the Wales Tourist Board.
The purpose of the survey was to ascertain the make up of those members working within the and to gauge members views on topical sector issues.
Of great interest to the industry is the view that respondents were positive about the profitability of the industry, as they felt that the last year was characterised by greater competition in the marketplace and increased customer demand. 51% of respondents with business operations in the UK forecast the profitability of the industry to improve in the coming year. Respondents with business operations on mainland Europe are more optimistic in their forecasts for profitability (61% expect an improvement in the coming year) than those with business operations in the UK.
Competition from mainland Europe continues to increase as cheaper travel alternatives are offered, with lower levels of VAT and the Euro, placing a strain on the competitiveness of the UK tourism and hospitality industry.
On the issue of funding for tourism, it was interesting to note that only 27% of respondents ‘strongly agree’ that the UK government should provide increased funding to tourism in England in line with the amount spent by the Scottish Parliament and the Welsh Assembly, though half (51%) of respondents believe lottery funding should be channelled more towards tourism projects.
The survey also asked respondents about employment issues surrounding the industry. Increasing customer demand and competition in the marketplace has created a greater need for skilled management and competent staff. However, there is a significant skills gap in the industry with almost a half (45%) of respondents report that skills shortages are restricting the industry’s opportunity to expand.
However, with the recent announcement of the raising of the National Minimum Wage, respondents will be further dismayed as they responded that the national minimum wage continues to have a negative impact on the industry’s performance. Half (48%) of respondents believe that the national minimum wage has had a worse impact on the industry’s performance in the past 12 months.
In terms of the effect of VAT on the tourism & hospitality industry, the finance professionals who responded to the survey are in favour of a reduction in the level of VAT for tourism related businesses - 15% ‘agree strongly’ and a quarter (25%) ‘tend to agree’ with this.
Respondents are also very much in favour of extending the VAT recovery scheme to all museums and galleries in the UK. A quarter (25%) of respondents ‘strongly agree’ that this should be done and a further 43% ‘tend to agree’ with this.
The issue of red tape is a real headache for the industry as 69% of respondents report that regulatory requirements have had a worse impact on the industry’s performance in 2004, and almost the same amount of respondents (67%) believe that the growth of the compensation culture in the UK is having a worse effect of the industry than it did 12 months ago.
Interestingly, given the current political climate over half of the respondents feel that the impact of terrorist activities is having less of an impact on the industry now than 12 months ago.
Commenting on these results, Geraint James, the Tourism & Hospitality SIG Chairman said: “This major survey of finance professionals working closely within the tourism & hospitality sector gives us much food for thought in terms of our lobbying activities and information priorities over the coming months.
“With the General Election campaign now in full swing we hope these results will act as a sector specific manifesto, and we also urge the next Chancellor, whoever that may be, to look at the financial implications of reducing VAT and increasing funding to English tourism in line with Wales and Scotland.”