Trade plays down impact of VAT rise on holiday sales

The trade has played down fears a rise in VAT will have a major impact on holiday sales.

Accountancy firm Deloitte has warned the rise in VAT from 17.5% to 20% on January 1 will hit higher-income families most, with a couple earning £70,000 set to pay nearly £600 a year more on average in taxes this year.

But agents, operators and bed banks argued travel was unlikely to be affected by the VAT increase because consumers viewed holidays as an essential part of their annual spend.

Kuoni vice-president distribution and operations Derek Jones said: “More than ever before, people are not prepared to give up their holidays and most data suggests that far from giving up on a holiday, the economic climate will have the opposite effect.”

On Holiday Group sales director Brian Young said: “People do not see holidays as a luxury item but more a necessity. If it means people have to cut their cloth accordingly they will.”

Holiday Discount Centre managing director Steve Campion added: “The VAT rise will have less impact than the public sector cuts; people will just absorb it and holidays tend to be fairly resilient.”

But he predicted the market could be later, with consumers put off spending in general by public sector cuts in the early part of the year. “Despite the fact VAT does not have a significant impact on travel [prices], there is still the public perception [that it will]. Once the cuts have happened people will start behaving normally.”

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