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Earlier this week, the government of the United Kingdom announced that its idiotic quarantine regulations would no longer apply to travelers visiting England from 60 nations as of 10 July but, even if you now find yourself allowed to travel to the UK, a recent announcement by the Chancellor of the Exchequer means that you probably shouldn’t be rushing to book your accommodation before 15 July.
As of 15 July, the UK government will be cutting the rate of tax levied on purchases made from various parts of the hospitality sector by 15%. Value Added Tax (VAT) on food, accommodation, movie theatres and select attractions will be reduced to just 5% and will remain at that rate through 12 January 2021.
Logically, you would expect this to mean that hotel rates for stays being made from 15 June would automatically be reduced by up to 15% (there’s no guarantee that hoteliers won’t keep some of the VAT savings for themselves by hiking prices) but, from what I can see right now (across all the major hotel chains), it would appear as if rates are not yet being reduced.
Here’s what IHG is currently charging for a room at the InterContiental Park Lane for a night in September…
…and here’s the cost of the same night at the Holiday Inn Express in Limehouse (a property at the diametrically opposite end of the market):
Notice that both are still charging VAT at 20% and, if you have the time and inclination to check, you’ll find that the same is happening with all rates (not just prepaid rates).
It may be the case that some properties will drop their flexible rates in the next couple of days as their IT departments catch up with the government’s announcement, but I suspect that prepaid rates may not drop until the rate of VAT drops on 15 July. Right now, with a lot of hotels still offering flexible cancellation policies for all reservations (including prepaid rates)*, it’s often not worth paying extra for a flexible rate so people should be holding out to see what the prepaid rates look like when the VAT element is finally adjusted.
With the official rate of VAT on large parts of the UK hospitality sector set to drop to just 5% on 15 July 2020, I’d advise travelers looking to visit the UK to avoid booking any hotel rate that doesn’t show VAT as being charged at 5%. Annoyingly, you may well have to wait until 15 July before that’s possible.
*Make sure you read each hotel’s Covid-19 cancellation/refund/rebooking policy carefully as changes to these policies are occurring more frequently right now – don’t assume all hotel policies are as generous now as they were just a few weeks ago.