Business rates hike could ‘choke off’ hospitality jobs
The Travelodge chief executive has warned that soaring business rates and stifling taxes are putting job creation in the hospitality sector at risk.
Peter Gowers said a string of costs facing businesses could result in “unintended consequences”. He said: “The Government is putting rocks in our rucksack, with the National Living Wage, business rates, the Apprenticeship Levy and pensions changes. It’s loading costs on to businesses and they need to be careful of unintended consequences. The hospitality sector has created thousands of jobs over the past few years, don’t choke it off.”
The hospitality sector generates £130bn in revenue for the UK economy, but parts of it are creaking under
severe cost pressures. Casual dining firms such as Byron, Prezzo and Jamie’s Italian have shut large swathes of their store estates recently, with all citing soaring costs.
Business rates in particular have been a bugbear for bricks and mortar firms, with billions added to bills following a highly criticised revaluation last year. Despite cost pressures, Travelodge booked a 6.6 per cent increase in revenue to £637.1m last year, with operating profit nudging up £2.3m to £112.4m.
Mr Gowers said: “New hotels are driving sales and more business travellers are choosing budget hotels because the quality has rocketed and they are in good locations now. For example, we have one in the City near the Gherkin, not where you’d normally expect a Travelodge to be. People on a night out at a gig or concert are also able to afford staying at a Travelodge rather than travelling home, that’s helped our sales too.”
The group plans to open 100 more hotels over the next five years, creating 2,500 jobs. The expansion and solid results mark a continued turnaround from when Travelodge went through a painful restructuring in 2012.
It saw GoldenTree Asset Management, Avenue Capital and Goldman Sachs take control of the company via a debt-for-equity swap from Dubai International Capital. The trio have invested £150m since then and “remain supportive”, Mr Gowers said.
While the group is now on a secure financial footing, Brexit is looming large and posing a threat to its workers. A total of 30 per cent of Travelodge’s 12,000-strong workforce is composed of EU nationals and, with the Government committed to exiting the single market and ending freedom of movement, Mr Gowers is taking matters into his own hands.
He said: “The Government is in danger of letting events overtake them – hotels, schools, care homes, restaurants all rely on EU workers. We’d like a guest worker programme eventually, but we can’t wait, so we’re helping those employees that are eligible with the cost and process of applying for permanent residency in the UK.”
According to figures from recruiter Manpower, 24 per cent of all staff in the hospitality sector come from the EU and Travelodge is pulling out all the stops to retain them in anticipation of a shrinking labour market.
“We’ve ‘in-sourced’ housekeepers and scrapped zero hours contracts as a way to protect our labour force and allow them to step up the career ladder,” the chief executive said. Recruitment will be on the agenda again this year with Travelodge set to open 20 new hotels across the UK, creating 550 new jobs and taking its total number of properties to 578.