Prime Minister Andy Burnham’s promised 10-year economic plan has put the UK travel and hospitality industry on alert. While his initial cost-of-living measures—removing VAT from domestic electricity bills and capping single bus fares at £2—offer some household relief, the sector is pressing for structural reforms that recognise tourism as a driver of growth, exports, and employment rather than a convenient source of tax revenue.
Consumer confidence remains fragile. UK inflation eased to 2.6% in June, but energy and fuel costs are still vulnerable to geopolitical shocks, and services inflation stays above the Bank of England’s target. Households are cautious, and that directly affects booking patterns. Families may travel less often, shorten trips, or trade down on accommodation. Hotels, restaurants, and pubs are already seeing customers scrutinise prices while operators struggle with rising payroll, food, energy, and property costs. The sector’s resilience has limits.
ABTA and UKHospitality Push for Policy Stability
ABTA has long argued that outbound travel could expand significantly by 2030 under the right conditions—supporting tour operators, travel agencies, airlines, airports, and the broader supply chain. The association’s message to Burnham is clear: avoid policies that add cost without delivering proportional economic or consumer benefit. Tourism should be treated as a productive industry, not a luxury to be taxed whenever the Treasury needs revenue.
UKHospitality echoes that view, warning that higher wages, employer costs, and increases in rateable values are eroding the benefits of existing business-rates discounts. Hospitality venues are property-intensive and tied to high streets and communities in a way many digital businesses are not. The sector pays a disproportionately large share of the national rates bill relative to its turnover. Burnham has spoken about reviving town centres; hospitality leaders expect a permanent, sector-wide rates settlement, not another temporary relief package.
Employment is another flashpoint. Hotels, restaurants, pubs, and visitor attractions provide large numbers of entry-level jobs, flexible roles, and career pathways for younger workers. When payroll taxes rise sharply, businesses reduce hours, delay recruitment, automate where possible, or raise prices. Weakening one of the country’s most accessible employment sectors would contradict the government’s growth and labour market participation goals.
Airlines Warn on Competitiveness and Green Fuel Costs
Airlines UK has cautioned that Britain risks losing aviation competitiveness as government-imposed costs account for a larger share of ticket prices. Carriers must fund fleet renewal, airport charges, decarbonisation commitments, and the transition to sustainable aviation fuel while competing against airlines based in countries with lower taxes and operating costs. Rising ticket prices could dampen demand on key routes such as London Heathrow–New York JFK, Manchester–Dubai, and Edinburgh–Amsterdam.
The travel sector is also adapting to shifting consumer behaviour. According to recent data, UK travelers are increasingly making last-minute bookings as economic and geopolitical pressures mount, adding uncertainty for airlines, hotels, and tour operators trying to forecast demand.
Burnham has acknowledged that some taxpayers may be asked to contribute more as the UK tax burden nears its highest level in decades. For travel businesses, the concern is not just whether taxes rise, but where they fall and how quickly companies can pass them on. The industry will be watching closely as the 10-year plan takes shape, hoping for a framework that treats tourism as a strategic asset rather than a cash cow.
