A leading London hotel executive has publicly declared he has no confidence in Chancellor Rachel Reeves to stimulate economic growth, delivering a stark warning ahead of this week's crucial Budget announcement.
'Not business friendly'
Gavin Taylor, the chief executive of the Clermont Hotel Group, which operates 14 locations and more than 4,000 rooms in the capital, branded the Chancellor as not particularly business friendly and not hospitality friendly. He stated that the current tax regime is discouraging investment, forcing his group to proceed with UK investments at a much lower level than we'd expected.
Taylor explained that while his company is finding ways to mitigate rising costs, such as signing a new deal with celebrity chef Gordon Ramsay, there is a limit to what can be done without government support. He emphasised that hospitality is the lifeblood of the country, employing huge numbers of people and capable of investing quickly, but only if the fiscal environment is right.
Call for lower VAT
The hotel boss specifically targeted the UK's 20 per cent VAT rate, labelling it one of the highest in Europe. He made a direct appeal to the Chancellor, arguing that the rate needs to be lowered to around 12.5 per cent to stimulate demand and allow the industry to grow.
She needs to look at the overall tax burden for UK hospitality and realise that we are being unfairly penalised, Taylor said. He acknowledged the Chancellor's difficult task of filling a black hole in the public finances but insisted that the hospitality sector is being disproportionately taxed.
London's saturated luxury market
Beyond taxation, Taylor issued a separate warning about the state of London's luxury hotel sector. He revealed that the market is becoming oversaturated, with more hotels opening but demand failing to keep pace.
This imbalance is leading to a previously unheard-of trend where luxury hotels are being forced to offer discounts to attract guests. Taylor noted that while the market experienced a strong rebound after the Covid-19 pandemic, growth has now stagnated.
London is the luxury capital of the world, he said. But I think the pendulum has swung too much the other way where there's too much of a luxury offering in the market currently. Despite this, he affirmed that London will always remain a fundamentally strong destination with a global draw.
