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, 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 MHCLG but, in their view, fell into the intended category. Unfortunately, following a request from MHCLG, this advice note was reluctantly withdrawn.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, so UKinbound is urging MHCLG to address this lack of understanding as to how leisure businesses operate.
UKinbound has written to MHCLG asking them to amend the guidance to local authorities on Business Rates Relief and grants as quickly as possible, so it includes tour operators and destination management companies, and therefore properly 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, CEO, UKinbound 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 £28.4 billion 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.
“My members are of course very grateful for all 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 many of my members are now thankfully preparing to re-open their businesses in the coming weeks. However, 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.
“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.”
Rob Russell, chief executive, AC Tours added “As a tour operator in 2019 we as one company alone brought in over 100,000 international tourists to the UK to experience our wonderful hotels, attractions and heritage. The spend of these visitors whilst here has not only benefitted our business but also those of our partners – the independent guides, drivers, hoteliers and restauranteurs that we work with.
“When we applied for business grant relief, we were told that we are not eligible as our address is registered as an office – surely we should be judged on what we do and not our building registration. Tour Operators such as ourselves work on tiny margins when compared to a number of other industries and being able to benefit from the support of the business rates relief could well be the difference for business survival through COVID-19.”
Roberto Pardal, director, Eurowelcome said “We are amazed and angry that our sector has not been recognised to qualify for Business Rates Relief and grant support. The retail and other sectors have received relief when they will be able to open from June onwards and yet our inbound tourist sector will most probably not operate for most of the year. I cannot see the logic at all and hope that this can be remedied by the government in due course.
“Many inbound tour operators will not survive without the Business Rates Relief / grants and yet the whole of the UK will need these businesses if the country is to see inbound visitors return in the medium to long term. Our business is based in the Borough of Wandsworth in London and I have contacted them on a number of occasions however they have not replied or engaged with me on this issue, which is extremely disappointing and just shows the level of interest that many councils and central government have about the tourism sector.”
Emmanuelle Spriet, chief executive, E-voyages Ltd said “We have been continually disappointed by the lack of clarity and support from Barnet – our local authority. Despite numerous attempts applying for the grant, which we as an inbound tour operator are clearly eligible for according to the government’s guidelines, the council systems have repeatedly rejected our application as not eligible.
“We know that other destination management companies with similar offices in other London boroughs or other cities in the UK have been successful, so it very much feels like a postcode lottery. We are asking the government to ensure that only one rule applies to all. Please do not leave this criteria to the discretion of individual councils as this clearly does not work.”
Staffan Nilsson, director, Europe Incoming “We are a vital part of the hospitality industry supply chain, bringing thousands of visitors to hotels, restaurants, attractions and coach operators annually. The Covid-19 pandemic has meant that most of our revenue has disappeared. Our objective now is to hibernate through 2020 and into 2021 until business returns. Without assistance, this will be very difficult.”
