News
Funding: Mayor Boris Johnson plans to raise £600 million towards the cost of Crossrail from developers
Ads by Google
Invest Thames Gateway Gateway to London Gateway to Europe
Contractors can take home up to 88% from contract work safely
Special Offers at London Hotels & £38 of Free Gifts! Book Online Now.
Come and experience a 3 star family run hotel in Northern Cyprus
The world's biggest hotel groups today warned Boris Johnson his plans for a “hotel tax” to pay for Crossrail would damage London's tourist industry.
Intercontinental Hotel Group, owner ofHoliday Inn and Crowne Plaza, and Wyndham Hotels were among those warning of dire consequences for the capital.
In a joint letter to the Mayor, they said his decision to raise funds from a levy on all new hotel developments in central London and the Isle of Dogswas “a mistake” and “a folly” that would put the growth of the industry at risk.
The funding deal for Crossrail agreed by the Mayor, Transport for London and the Government anticipates raising £600 million towards the cost of the project from developers. Half of this would come directly from a levy on office, retail and hotel developments.
The Greater London Authority originally proposed that only office blocks be included but this was widened to include retail and hotels. A consultation into the changes closes today and Mr Johnson will then have to sign off a report in the next few weeks.
The hotel group's letter says: “It has the potential to damage the capital's tourism industry, the wider London economy and appears contrary to the number one objective of your Tourism Action Plan: support jobs in London's tourism businesses.
“We understand the importance of Crossrail . . . but do not agree that your addition of a hotel tax is an appropriate way to raise extra finance.”
The hoteliers believe the levy would add between three and four per cent to the cost of a new hotel, meaning a 200-bed hotel would cost an extra £300,000 to build. This would come on top of the planned Crossrail supplementary business rate.
Travelodge has 17 sites it wants to develop in the next 10 years but says the levy would add £9 million to its bill.
Chief executive Grant Hearn said: “Given how supportive the Mayor has been of the tourism industry I am surprised the GLA has decided to include the hotel industry in its development tax. With the Olympics set to raise London's profile around the world, introducing a tax which will slow down the development of new hotels is counter-productive.”
A spokesman for Mr Johnson said: “An independent panel recommended that hotel, retail and office developments be included in making financial contributions to the Crossrail project.
“The recommendations should have a minimal impact on tourism but in these difficult times the Mayor has proposed that for an initial three-year period there should be a 20 per cent reduction in the sums sought for developments that receive permission and are started during this time.”
Guests will have to pay
Whitbread, which owns Premier Inn hotels, is also lobbying the Mayor. The firm plans to build at least four hotels within the central charge zone in time for the 2012 Games.
Chief executive Alan Parker said: “This could cost us over £2 million. It's a last-minute change which has pushed up our construction budget by five per cent. We're still going to go ahead because we're committed, but we have to reclaim the money back somehow and unfortunately we're going to have to pass on the extra cost to customers.”
He added: “Boris shouldn't kill the goose that lays the golden egg. This levy is effectively an extra tax on a business creating jobs in the capital. Funding Crossrail by this levy will be counter-productive and may do long term damage to London's tourist industry. This charge will only go to act as a disincentive to developers and threaten expansion.”
Sri Carmichael
