Premier UK tourism destinations are collapsing under the strain of Rachel Reeves's economic policies, industry figures have warned. The Chancellor unleashed a fresh host of tax hikes on the sector in her November Budget, including changes to business rates - a form of commercial property tax - that could see costs double over the next three years. She also revealed that an existing 40% discount for retail hospitality and leisure firms will end in April, piling new burdens on an already-struggling sector.
Allen Simpson, Deputy CEO of UK Hospitality, said businesses in Cornwall and Devon, two of the UK's most popular stay-cation spots, had barely adjusted to "enormous" hikes in cost from Ms Reeves's first Budget, which raised employer's National Insurance and the minimum wage, before the latest tax hikes were announced. Tim Hassell, who runs the Thurlestone Hotel in south Devon, said his costs have risen £350,000 since Labour came to power.
"The last two Budgets have added about £350,000 to our costs through National Insurance, business rates and other bits and pieces," he told The Telegraph. "That is a huge amount for us to bear, and our profits are not high enough to sustain that. We owe it to our shareholders and our employees to make a profit."
Analysis of government figures by the newspaper revealed that the biggest hike in business rates has been in coastal holiday regions including Devon, where average rateable values have risen by 66%.
Trade body UK Hospitality has estimated that business rates will more double by 2029, potentially acting as a nail in the coffin for operators in seaside holiday spots.
Mr Simpson highlighted the vital role of hospitality and tourism businesses in driving the local economy of coastal regions including Devon and Cornwall through job creation and visitor appeal.
He also warned that increased business rates risk creating a perfect storm for the country's famous seaside tourism sector, following "enormous" increases to employer National Contributions last April.
Firms including Hilton, Butlin's and Travelodge wrote to Ms Reeves last week calling for an urgent solution to the crisis facing UK hospitality, including an extension of her promised support for the country's pubs.
In the letter, the bosses said the increases are "not something businesses will be able to easily absorb" and warned that passing costs onto guests would exacerbate cost-of-living pressures.
"These changes to business rates present the most significant challenge to acommodation providers in terms of their ongoing viability, and many will face tough decisions in terms of their employment and their ability to invest," it added.
A government spokesperson said: "We are working with the sector along with the Visitor Economy Advisory Council to demonstrate tourism's role in driving local economies and to spread its benefits across all regions, including coastal and seaside areas like Cornwall and Devon.
"We're backing hospitality businesses with a £4.3billion support package to limit bills rises, alongside capping corporation tax at 25%, cutting red tape and taking action on the cost-of-living to boost high streets."
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