A Fair Shake…
Hospitality Doesn't Need Sympathy. It Needs a Fair Playing Field
We've Been Asking the Wrong Question
Every few years, the debate around VAT in hospitality returns.
Supporters argue that a reduced rate would support jobs, investment and growth. Critics describe it as a tax break for business. The arguments are familiar and the positions well rehearsed.
Yet I have always felt that both sides are asking the wrong question.
The real issue is not whether hospitality deserves support. The real issue is whether we properly understand the role hospitality plays in our economy and our communities.
A few years ago, I sat with an operator who was running what most people would describe as a successful business. The venue was busy. Customers were happy. The team were engaged. Revenue was growing.
Yet despite doing all the things we are told successful businesses should do, he was struggling to generate the profit needed to invest in the future.
His question was simple.
"At what point does being successful become enough?"
That conversation has stayed with me because it captures a challenge that exists across much of the hospitality sector today. Many businesses are working harder than ever, delivering better experiences than ever, and employing thousands of people, yet they are operating on increasingly tight margins.
A fair Shake …
Busy Doesn't Always Mean Sustainable
Hospitality has always been a tough business, but the pressures facing operators today feel particularly acute.
Labour costs have risen significantly. Energy prices remain volatile. Supply chains continue to exert pressure. At the same time, customers are facing their own financial challenges and have become understandably more cautious about where and how they spend their money.
The result is a strange paradox.
Many hospitality businesses are busy, but not necessarily secure.
They are popular, but not always resilient.
They are generating revenue, but often finding it harder to generate the profit required to reinvest, innovate and grow.
For a sector that employs millions of people and contributes significantly to the UK economy, that should concern us all.
Hospitality Is More Than a Sector
Part of the challenge is that we continue to think about hospitality too narrowly.
We talk about restaurants, hotels, pubs and cafés as though they exist separately from the wider economy. In reality, hospitality is woven into almost every aspect of how we experience places.
When somebody visits a museum, they often have lunch nearby. When they attend a concert, they may book a hotel. A conference delegate uses local restaurants, taxis and bars. A family day out generates spending across an entire destination.
People do not experience destinations in sectors.
They experience them as places.
This matters because the success of one part of the visitor economy is often dependent on the health of another. Hospitality is not simply a beneficiary of successful destinations; it is one of the ingredients that makes those destinations successful in the first place.
What the Best Hospitality Leaders Understand
The most respected figures in the industry have understood this for decades.
Danny Meyer built his reputation on the belief that hospitality is fundamentally about people and relationships. Commercial success followed because the experience was exceptional.
Closer to home, Jeremy King transformed London's restaurant scene by recognising that people rarely remember a menu in detail, but they always remember how a place made them feel.
Both understood something that policymakers often overlook.
Hospitality is not simply a transaction.
It is an experience business.
And experiences have a multiplier effect. A thriving hospitality sector supports tourism, culture, retail and transport. It creates employment opportunities, develops skills and helps towns and cities develop a sense of identity and character.
The Link Between Hospitality and Place
If you want evidence of hospitality's wider impact, look at almost any successful regeneration story in Britain over the past two decades.
Whether it is King's Cross in London, the continued evolution of Manchester city centre, or the transformation of Liverpool's waterfront, hospitality has played a central role.
It creates footfall ,encourages people to stay longer ,increases spend and creates confidence.
Most importantly, it gives people a reason to visit.
The strongest destinations understand this instinctively. They know that museums, galleries, sporting venues, theatres, hotels, restaurants and cafés are not competing priorities. They are parts of the same ecosystem.
When one thrives, the others often benefit.
When one struggles, the impact is felt much more widely.
Why VAT Matters
This is where the VAT discussion becomes important.
Too often, a reduction in VAT is framed as a concession or a favour to business.
I see it differently I see it as an investment in economic activity.
Many European countries have recognised this for years. Reduced VAT rates are used as tools to strengthen tourism, improve competitiveness and encourage investment. They are not viewed as acts of generosity. They are viewed as practical economic policy.
The logic is straightforward.
When businesses retain more of their revenue, they gain greater capacity to invest. They can improve facilities, develop their teams, create better career opportunities and absorb some of the pressures that would otherwise be passed directly to customers.
Most importantly, they gain the ability to build resilience.
And resilience is something every economy should value.
A Question of Perspective
Of course, VAT is not a silver bullet.
The sector continues to face challenges around workforce development, productivity, business rates and access to investment. No single policy change will solve every problem.
But that is not really the point.
The point is that the VAT debate reveals something about how we think.
Do we see hospitality as a collection of businesses asking for support?
Or do we see it as part of the infrastructure that underpins thriving places, successful visitor economies and vibrant communities?
I believe it is the latter.
A Better Conversation
The hospitality sector does not need sympathy.
It has demonstrated extraordinary resilience time and again.
Nor is it asking for special treatment.
What it needs is a fair understanding of the value it creates.
Because every hotel, restaurant, café and pub contributes something greater than its balance sheet suggests. Together they create jobs, support communities, drive tourism and help define the character of the places we live in and visit.
In an economy searching for growth, that feels less like a cost and more like an investment.
And perhaps that is where the conversation should begin.
