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croft 2020

Conflicting government advice adding to tourism business hardship, says UKinbound

Tourism businesses, specifically tour operators and destination management companies, are at grave financial risk of collapse if the government does not urgently amend its arbitrary advice for the leisure industry, travel trade association UKinbound has found.

In direct conflict to the chancellor and HM Treasury’s repeated statements that all businesses in the leisure sector are eligible for support, UKinbound has discovered that many of its tour operator and destination management company members can’t secure Business Rate Relief and related grants from their local authorities, because MHCLG does not believe tour operators are part of the leisure industry. 

On 2 April the Local Government Association issued an advice note to local authorities which identified some leisure-related businesses, such as tour operators, that were not explicitly mentioned in the guidance issued by Ministry of Housing, Communities and Local Government (MHCLG) but, in their view, fell into the intended category. Following a request from MHCLG, this advice note was reluctantly withdrawn.

The view that tour operators are not leisure businesses has been based on the fact that customers do not enter premises to make a purchase. UKinbound has urged MHCLG to address this lack of understanding as to how leisure businesses operate. 

UKinbound says it has written to MHCLG asking them to amend the guidance to local authorities on Business Rates Relief and grants as quickly as possible, so to include tour operators and destination management companies, and therefore reflects the government’s intention to provide support for all leisure businesses.

Many local authorities have raised the importance of helping these businesses, and the wider tourism supply chain, with the Local Government Association, however, there continues to be discrepancies with regards to relief and grant support throughout the UK. 

Joss Croft (pictured), CEO of UKinbound noted that the situation highlights a lack of understanding about the sector. He said: “This arbitrary decision to instruct local councils to exclude certain tourism businesses from vital financial support is not only confusing and frustrating for all involved, it also shows a real lack of understanding of how our industry operates. For example, a travel agent that sells a customer a ticket for a tour is eligible for support but the tour operator that actually takes the customer on the tour is not.

“Failing to help these businesses also puts at risk thousands of other businesses that generate a large percentage of the revenue that the UK earns from inbound tourism. Last year inbound tourism generated £28.4bn for the UK economy.

“Furthermore, all local authorities benefit from a strong visitor economy and losing key businesses will significantly impact on their budgets, including their ability to raise income to reinvest in local public services.”

Croft noted that UKinbound members had been able to make use of the support that the government has put in place for the tourism industry to date, such as the Job Retention Scheme and financial loans, and said that many members are now preparing to re-open their businesses in the coming weeks.

However, he added that tour operator members, who rely almost 100% on international visitors for their income, are now facing the likelihood of earning no income over the peak summer months, due to uncertainty over international travel restrictions and UK quarantine measures, which will add further to their financial problems.

He said: “We are therefore asking government to amend the guidance to Local Authorities on Business Rates Relief and grants as quickly as possible, so it fully reflects the government’s intention to provide support for all leisure businesses.”