In a significant announcement that sets the tone for the economic trajectory of the United Kingdom, Chancellor Jeremy Hunt’s Spring 2024 Budget outlines strategic fiscal adjustments aimed at fostering long-term growth amidst challenging times.
The outdoor hospitality industry, a vibrant segment of the UK’s economy, stands at the forefront of experiencing direct and indirect impacts from these policy shifts. One of the standout measures in the Chancellor’s budget is the scrapping of certain tax breaks for holiday let landlords.
“I am concerned that this tax regime is creating a distortion meaning that there are not enough properties available for long-term rental by local people. So to make the tax system work better for local communities, I am going to abolish the Furnished Holiday Lettings regime,” said Hunt in his speech.
This move has caught the attention of industry stakeholders, including Dan Yates, founder of Pitchup.com, and Emma and Rich Liddle of Lydcott Glamping Ltd, who anticipate a significant redirection of demand towards more budget-friendly outdoor accommodations like holiday parks and glampsites.
“The cost differential between a week at a holiday let and the same duration of stay at a holiday park has always promoted strong demand for the latter. With the UK’s current economic challenges, this policy change could further drive holidaymakers to seek out budget-friendly options available at holiday parks and glamping sites,” said Yates in an email interview with Modern Campground.
Similarly, Emma and Rich Liddle express their outlook on the potential for increased demand for holiday parks, stating that the industry is recently flooded with short-term holiday rentals and the “new regulations could make owners rethink their strategy.”
“This shift could reduce the competition for traditional holiday parks and glamping sites like ours, hopefully leading to a more balanced market for those of us committed to providing quality tourism and hospitality experiences,” they said in an email exchange with Modern Campground.
Additionally, the Chancellor’s decision to reduce Capital Gains Tax from 28% to 24% has been met with mixed reactions. While seen as an incentive for property sales, Yates observes the reduction in capital gains tax rates “will ultimately encourage people to sell their holiday lets,” potentially decreasing competition for traditional outdoor hospitality venues.
Economic Growth and the Path Forward
The budget also emphasizes economic growth, with specific nods to the support of small businesses and infrastructure development across the UK. Such initiatives are viewed by industry professionals as crucial for enhancing the appeal and accessibility of holiday destinations.
Jamie Keith, director – head of Holiday and Residential Parks for Christie & Co., said it means an increase in demand for holiday parks, which are “not directly affected by such changes.”
“The holiday park market should benefit from the scrapping of a series of tax breaks designed to help holiday let landlords. This may result in more housing stock being released to the market, reducing the overall volume of holiday accommodation stock,” said Keith.
While the budget brings potential benefits for holiday parks, not all sectors within the outdoor hospitality industry stand to gain equally. Keith highlighted a particular concern for the residential park home sector.
“In contrast, today’s measures provide little benefit to the Residential Park Home sector, as the majority of park home owners are pensioners. As a result, their ability to pay increased residential park home pitch fees remains a concern,” said Keith.
“In the Autumn Statement, I froze alcohol duty until August of this year. Without any action today, it would have been due to rise by 3%. But I have listened carefully… So today I have decided to extend the alcohol duty freeze until February 2025,” said Hunt.
“This benefits 38,000 pubs all across the UK – and on top of the £13,000 saving a typical pub will get from the 75% business rates discount I announced in the Autumn.”
Yates outlines Pitchup.com’s strategy to rapidly adapt to market demands, utilizing the platform’s flexibility to expand inventory and meet traveler expectations. The extended freeze on fuel duty was another highlight, praised for its potential to make domestic travel more affordable and appealing.
“By keeping fuel prices stable, the cost of traveling domestically remains comparatively lower,” emphasizing the budget’s potential to significantly enhance the appeal of domestic travel.
This move, according to Yates, stands to benefit the outdoor hospitality sector by making holiday parks and glamping sites more attractive and accessible to a wider audience of travelers looking for budget-friendly vacation options within the UK.
Innovation and Sustainability: The Industry’s Response
The outdoor hospitality sector is also keyed into the budget’s indirect messages on innovation and sustainability. Yates predicts significant growth within sectors offering unique experiences, especially those aligned with environmental sustainability practices.
“In today’s Budget for Long Term Growth, I take further steps to attract investment into our technology-related industries. […] Our brilliant Energy Security and Net Zero Secretary will also allocate up to £120m more to the Green Industries Growth Accelerator to build supply chains for new technology ranging from offshore wind to carbon capture and storage,” said Hunt.
Yates said there is also potential for collaboration and innovation in implementing eco-friendly practices such as increased EV charging points, utilization of renewable energy sources, and adoption of sustainable practices overall.
“We see several sectors within outdoor hospitality poised for significant growth, particularly those offering unique experiences and expanded services. Glamping accommodation stands out, as it caters to travelers seeking luxury and comfort amidst natural settings,” he said.
This sentiment is echoed by Vicki Jones from Tractors & Cream Glamping, who despite not taking advantage of previous tax breaks, recognizes the ongoing challenges and opportunities presented by the current economic landscape.
“We definitely have no intention of increasing our prices because of the budget but do feel that the government is completely focusing their energies on the wrong businesses,” she said. “I understand that the government is hoping to encourage holiday lets to convert to long-term rentals but the monetary reward for long-term rentals is nowhere near that of short-term rentals, so landlords are unlikely to convert.”
A Collective Outlook
As the UK embarks on a path of economic recalibration, the outdoor hospitality industry aligns itself with the government’s vision for a resilient and sustainable future. Stakeholders across the sector are preparing for a surge in demand, fueled by a combination of fiscal incentives and strategic support measures.
Yates highlights the adaptive nature of the outdoor hospitality industry, especially in times of change, stating that Pitchup is built for fast-moving change by capitalizing on these capabilities, they can effectively accommodate the expected increase in demand. This readiness to adapt underscores the sector’s resilience and its capacity to leverage technological advancements for growth.
Further emphasizing the industry’s dynamism, Emma and Rich Liddle expect there to be greater demand for reasonably priced good quality accommodation, and an increase in 2-3 night stays from cash-strapped people looking for a break.
From tax reforms to fuel duty freezes, the Spring 2024 Budget lays down a blueprint for growth and innovation within one of the UK’s most cherished sectors. The coming years will undoubtedly reveal the full impact of these policies on the outdoor hospitality industry.
Yet, with the insights of business owners like Yates and the Liddles, the sector appears ready to navigate the evolving economic landscape with optimism and strategic foresight.