§ 6.10 p.m.
§ LORD GIFFORD rose to call attention to the increasing loss in dollar earnings caused by the shortage of hotel accommodation, particularly in London; to urge Her Majesty's Government to consider creating more favourable conditions to those wishing to make economical use of valuable sites in the West End for the erection of large modern hotels, which are urgently needed to cater for visitors from overseas; and to move for Papers. The noble Lord said: My Lords, your Lordships have spent two long and gruelling days on foreign travel, after which you endeavoured to balance your budgets—always a difficult thing when returning from abroad. It is therefore hardly surprising that a number of noble Lords have preferred their homes to hotels, which will be the subject of my Motion to-day.
§ In the debate on the Budget, as in every economic debate that I have heard in this House, more than one speaker has emphasised the importance of building up our exports, particularly to dollar countries. I think this view is held irrespective of Party—it is perhaps the only point on which every economist agrees. My Motion to-day is based on the greatest of all our exports, and by far the largest dollar-earner. I refer to the tourist industry, the importance of which to this country cannot be emphasised too frequently. It is estimated that over 1¼million visitors will come to Britain this year, and that they will spend, including fares, about£190 million. These are enormous figures: 1¼million visitors spending£190 million. Compare this total with about 400,000 visitors in 1947 and less than half a million in 1937, the best pre-war year. In ten years the tourist traffic has increased by about 200 per cent.
§ We have to face a probable annual influx of about two million visitors in about five to ten years' time. What are we doing about it? The airlines are doing a great deal. The noble Lord, Lord Douglas of Kirtleside, Chairman of British European Airways, has stated that£1,000 million has already been invested in 1,000 jet or turbo-prop airliners, and that more than five times that number will be required by 1970. These are huge figures, but the money being 454 spent on these airliners will be wasted if the passengers they bring cannot be accommodated when they get here. Foreign airlines will carry them to Continental countries which have had the forethought to encourage the building of large modern hotels aided by various Government schemes. I am appealing to the Government to-day to give immediate and earnest attention to this problem, because I believe that every million pounds spent on providing hotels will bring in several times that figure in foreign currency. It has been said that every hotel room of the right type built in this country will earn us£4,000 per annum in foreign currency.
§ In May of this year the British Travel and Holidays Association held a two-day conference at the Board of Trade. The Chairman, Sir Arthur Morse, told me that he was calling this conference because he and his staff were getting desperate. They were beginning to feel that their most successful "Come to Britain" scheme and campaign would shortly be a waste of time and money because there would be nowhere to put those visitors who came as a result of their excellent propaganda. Even now it is believed that 10 per cent. more visitors from America would have come here last year if the rooms had been available. The hulk of American tourists are sent here by American travel agents. Some of them, of course, come under their own steam, but great numbers of them come in large or small parties, organised not from here but by travel agents in America; and if those American travel agents cannot quickly and easily obtain hotel accommodation in Britain. their tours will by-pass Britain and will be confined to the Continent, where they get much more help and encouragement from the hotels.
§ Now, at the conference to which I have referred it was significant that, although only one of the four sessions was devoted to hotels, the subject kept on cropping up at every single session. In fact, the chairman felt compelled to put his foot down and to rule that any further mention of hotels would be out of order. This conference on tourism was opened by Mr. R. A. Butler, and every one of the four sessions was attended by a Minister or Under-Secretary from the Board of Trade, the Home Office, or the Ministry of Transport: so 455 there is no doubt that the Government took a great interest in this conference. I am therefore much encouraged in bringing this Motion before your Lordships to-day by the obvious interest which is being taken in Government circles. I might interpose here that I also sympathise with the noble Lord, Lord Mancroft, in that not for the first time he has to answer for several Departments at once.
§ Now I come to this point: that there is an undoubted need for far more hotel rooms with private baths. But why are practically none being built? The answer is that with present day costs at somewhere about£5,000 to£6,000 per room it simply is not an attractive proposition. I could give several glaring examples, but I will quote only one. The directors of Quaglino's acquired the adjoining site facing Jermyn Street—the site of that famous pre-war institution the Hammam Turkish Baths, which some of your Lordships will remember. The hotel already had all the necessary restaurant facilities, but what did they do on this site? They merely built a banqueting room in the basement and built an office block on top of it. When one thinks of it, this was an ideal opportunity to increase the number of hotel rooms in London. When I expressed disappointment to the chairman, whom I know well, he told me that with the huge capital cost involved the new bedrooms would not have been an economic proposition. How much greater are the difficulties in the way of anyone wishing to build a new hotel from scratch!
§ THE EARL OF LUCAN
Before the noble Lord goes on, perhaps he could answer one question. One of the things he has said puzzles me. As I understood him, he said that the cost of hotel rooms was from£5,000 to£6,000 per room. He has also told us that each room was calculated to bring in£4,000 a year in revenue. How, in that case, is it not an economic proposition to build hotel rooms?
In answer to the noble Earl opposite, I can only say that I have not myself gone into the question of building hotels, but it simply is impossible to get finance for building an hotel; and existing hotel interests of great experience are not building new hotels 456 simply because their calculations show that it is not economic. I do not think that now is the time to go into this matter in detail, but there are the enormous overheads, the staff, and everything else to be dealt with if you are going to link up those figures. The earlier figure I gave was a figure that the British Travel and Holidays Association worked out on the best information available.
My first proposal is that cheap capital should be made available to those wishing to build new hotels or to modernise existing hotels which are considered suitable. As I have already said, banks and finance houses do not look favourably on requests from hoteliers, as they do not consider hotels to be an attractive investment. I should like to see the Government establish a body to be known, let us say, as "The Hotels Finance Corporation"—something on the lines of the Finance Corporation for Industry, which would act similarly to that body. Schemes put before this body would be carefully considered, taking particular account of their value as dollar-earners. In suitable cases no-interest loans would be made for this purpose and for major improvements designed to make hotels suitable for overseas visitors, the main requirement being more rooms with private baths. That is what is always wanted by people coming here from America. Many other countries are doing this, particularly Spain and Italy, with a consequent increase in the number of hotel beds since the war.
Your Lordships have heard my suggestion about finance; but finance is useless and projects are doomed to failure unless hotels can be built on the right sites and can be planned to make the best and maximum use of the ground available. Several big property owners, usually in conjunction with American hotel interests, have been planning large hotels in this country since the war, but all except the Westbury in Bond Street have failed to reach fruition. There have been the Hyde Park Hotel plan, the Manchester Square project and now the Park Lane scheme. Big new blocks of offices have reared their heads all over the West End, but hardly any hotels, and the position has been made worse by the fact that hotels requisitioned at the outbreak of war, such as the Carlton and the Metro-pole, have been permanently lost.
Why have none of these schemes been carried out? I believe that the answer 457 is that they have not received sympathetic and helpful consideration from the planning authorities. These authorities have old-fashioned ideas and seem terrified of tall buildings. And without height no hotel on a central and expensive site can get full value out of the site. It is an axiom that a first-class hotel must be in what visitors consider to be the right position. Many of them stay only two or three days and want to be right in the centre. For instance, Americans will not accept a hotel on what they colloquially know as "the wrong side of the tracks".
I should like to give your Lordships a few more details about the Park Lane project, because I think it is one of the most important. I do not think I can do better than read from a letter from Mr. Charles Clore, published in The Times on March 24. He starts off by saying that the Parliamentary Secretary to the Board of Trade had spoken about the necessity for at least 3,000 more bedrooms and about how important it was to expand the hotel industry. He goes on:I can only speak of matters with which I personally have been concerned. Some 10 years ago I and those associated with me came to the conclusion that the changes which had occurred and which were anticipated in travel facilities justified a vigorous policy of expansion in the hotel industry. We decided that it weed be good business as well as in the national interest to venture our capital in an industry which formerly had been regarded as one which was highly speculative. Accordingly we investigated a number of propositions, but our efforts were frustrated by various factors including the attitude of local authorities and Government Departments.Finally in 1956 we were able to acquire a site which is generally agreed to be ideal for a new hotel. Months of discussion between the planning authorities and our professional advisers in efforts to bring the project within the rules and regulations (most of which were not designed to apply to hotels) resulted in a scheme being suggested to us which was clearly an economic impossibility.Accordingly in May, 1957, we made a formal application to the London County Council for consent in principle to the construction of a large hotel on the site in the hope that this would force a speedy decision. In August we were advised that the matter had been taken out of the hands of the London County Council by the Minister of Housing and Local Government. A public inquiry was held in November and we are still awaiting a decision. In the meantime modern hotels to attract the ever growing tourist trade are springing up all over the world, except in Britain.458 Since that letter was written there is still no definite action, and Mr. Clore's associates in the scheme, the Hilton Hotel Group, are becoming disheartened. They have already built large hotels in other parts of Europe, notably in Istambul and Madrid.
The London hotel planned would have had 700 double bedrooms, each with bath and dressing room. It was estimated that it would earn six million dollars a year, and, of course, tourists would spend many times that amount outside the hotel. There was also to be internal parking for 260 cars, which would help another acute problem in London. The Hilton Hotel Organisation believe that they could arrange conferences and conventions at the hotel, flying Americans over for these conventions, and this would help to fill it during the off-peak seasons. This scheme was turned down altogether in May, 1958, after a whole year of negotiations. The Minister is now considering a scheme for a 500-bedroom hotel as an alternative, but, of course, this proposition is much less attractive; the cost per bedroom rises by at least£1,000, probably more, and the hotel will be much less economic and probably impossible unless some cheap finance goes with it. In any case, there is still no decision after all these months. All we know is that the scheme is under active consideration. I hope that a decision, long overdue, will soon be given. Another group, Messrs. J. Lyons & Company, are considering a large scheme on the Trocadero site. I hope that their plans, when submitted to the Minister, will be dealt with quickly and sympathetically.
I have spoken about cheap finance and help with regard to planning, but there are several other ways in which help can be given to the hotel industry, and I should like to mention those ways briefly. Many hotels have been built in the United States and Canada since the war. One reason for this is a generous depreciation allowance for tax purposes on all hotel buildings. I see no reason why hotels should not be treated in the same way as industrial buildings, with an initial allowance of 12½per cent. and an annual allowance of 2 per cent. Similarly, hotels should be treated as industrial premises for rating purposes, or rating concessions should be given where bedrooms of a certain standard are provided.
459 Hotels must keep their décor up to date and their interior appointments in line with modern taste in decoration. It is only right that this cost of decoration and modernisation should be allowed as a trading expense for tax purposes. There is also a curious anachronism called monopoly value, which is imposed on premises licensed since 1904. Few people realise the existence of this burden and I think that its abolition is long overdue, as it is one more unnecessary straw which may break the back of the industry. Finally, I come to the much argued subject of purchase tax on catering equipment—china, glass, linen, et cetera—the tools of the trade. Passenger ships buy this equipment free of purchase tax. Why not hotels? I know that there are administrative difficulties, but I believe that they could be overcome and I would ask the Minister to give another thought to this matter.
Before I sit down I should like to compliment the Government on their expressed intention of repealing the Catering Wages Act, which has created many anomalies and has added greatly to the difficulty and expense of running hotels. I only hope that the new catering wages boards will give greater flexibility, which is very necessary to enable hotels, particularly smaller ones, to give better service to their guests. I think it only fair to say that certain existing hotel interests, whose opinion demands respect, maintain that the existing hotels now erected in London cannot be filled throughout the year, but the fact remains that it is most difficult for all those concerned with travel ever to obtain a room in any of our leading hotels. That is an experience common will all travel agencies. My hope is that if some or all of my proposals are adopted, those with the greatest experience of running hotels will concern themselves with building new ones, confident that they can be made to pay, even though there must be some periods of the year when it must be accepted that a substantial number of rooms will be empty. My remarks have been largely concerned with London, but they apply to other large cities where overseas visitors on business or on holiday wish to go.
I should like to conclude by summarising my specific proposals. First, a finance corporation for hotels. Secondly, much 460 greater and speedier assistance from the Government in obtaining permission for tall buildings. Thirdly, generous depreciation allowance on hotel buildings. Fourthly, hotels to be treated as industrial premises for rating purposes. Fifthly, the *cost of new decoration and new décor to be allowed as a trading expense. Sixthly, abolition of monopoly value; and lastly, abolition of purchase tax on the tools of the trade—china, linen et cetera. I believe these are practical suggestions, and they are supported by many people with much greater knowledge of the hotel industry than I have. I therefore commend them to your Lordships and to Her Majesty's Government. When opening the new wing of Grosvenor House last year, the previous Chancellor of the Exchequer said:Everybody knows that there is not enough first-class hotel accommodation in London. Everybody has been saying this for years.My Lords, let us stop saying and begin doing. If, in the next twelve months, I can look up and see the steel framework of a modern hotel towering against the London skyline, I shall feel well rewarded for having raised this matter to-day. I beg to move for Papers.
§ 6.32 p.m.
§ LORD HADEN-GUEST
My Lords, the noble Lord, Lord Gifford, has given us a general suggestion about the value of good hotels. I speak as one who for a good many years was the medical officer called in at all times of the day and night to help one of the best known hotels in London—I will not mention its name. I have therefore a great knowledge of hotel life, organisation, and so on. One thing I can tell the noble Lord is that the prices charged by the particular hotel I am thinking about—which I am sure the noble Lord knows well—and the prices he has quoted are out of all comparison. It is not necessary to have prices of the kind he has given. I am not sure whether the noble Lord said£1,000 for a room with a bath, but that seems to me to be nonsensical.
I think we are at cross purposes. I am not dealing with existing hotels, built before the war, of which the leading ones are doing quite well and their balance sheets show a profit. But that is a different thing from building a new hotel from scratch now, when the capital costs of building are 461 many times greater than they were. It is riot considered possible to build a new hotel which, when completed, will be an economic proposition, because the capital costs are so high. That does not affect the hotels that have already been built which are on quite a "good wicket."
§ Loma HADEN-GUEST
I intervene only because of my special knowledge of this matter, and I do not think any very high prices such as the noble Lord suggested—was it£1,000 for a room?—are necessary.
I am not talking of what the guests are charged, but about the capital cost of building a new hotel, which is a different matter.
§ LORD HADEN-GUEST I agree that that is a different matter, but I think the prices which are being charged are quite excessive.
§ 6.35 p.m.
§ LORD JESSEL
My Lords, I have no interest in the hotel or catering industry other than as a consumer. I am sure your Lordships will all be most grateful to my noble friend Lord Gifford for putting down this Motion, which draws attention to what is obviously an unsatisfactory situation in a large capital city. It s not only the tourists who suffer; people coming here on business have the same sort of difficulties. I have spent many frustrating hours on the telephone trying to get accommodation for overseas visitors coming here on business, especially during the summer months. So there is no doubt that there is a shortage of suitable hotel accommodation, during the week much more than at week-ends, and probably for about three months in the year.
Here I should like, with your Lordships' permission, to quote a few sentences from the speech made by Mr. Wontner, the chairman and managing director of the Savoy Hotel Company, at their last annual general meeting. He said:Judging by official figures, the peak months last year for- the overseas trade were July, August, and June, in that order, with September and May as the next most important months. In November, December, January. February and March, all five months combined, there were fewer visitors in the aggregate than in the four weeks in July. This demonstrates the essential difficulty about new hotels built for the overseas tourist trade: the demand for rooms is so heavily concentrated in far too short a period of the year.462 So, with present-day building costs and current site values, the total cost of equipping a new hotel would, I think, as my noble friend Lord Gifford said, almost certainly prove to be uneconomic. I think it is true to say that many capital cities and large towns all over the world are faced with the same problem. But I do not think the solution is the simple one of building more new hotels. For instance, I do not think anyone is going to be foolish enough to build a new hotel in Dublin just for the week of the Horse Show, because if they did, they would find it empty for practically the whole of the rest of the year.
But in spite of this rather discouraging picture I have painted, I am glad to see that, even under existing conditions, there are some optimists about, because I have seen from the newspapers that permission has been recently given for the building in the Lancaster Gate area of a new hotel comprising some 600 to 800 bedrooms. I wish the backers of this enterprise every success. My noble friend Lord Gifford has emphasised the need for helping the promoters of new modern hotels, but I think it would be unfair for the Government to grant any favours only to newcomers, and any concessions which are going to be made should be made for the benefit of the whole industry. I think the most practical way of dealing with this problem is for the Government to encourage existing hotels and restaurants to carry out extensions and improvements. Some could expand and others could bring the standard of their accommodation up to what is now demanded by every overseas visitor who has any money to spend.
How can this be done? I suggest that there are several ways in which the Government could help to reduce the operating costs of these establishments. For instance, under the present law all expenses on buildings and equipment of hotels which are not specific replacements of existing assets are treated as capital items. So the cost of modernisation has to be met out of taxed profits. But with taxation as high as it is to-day, it is almost impossible to set aside a sufficient amount of money from this source to do what is necessary. It would undoubtedly be a great help if all alterations within the four walls of existing hotels could qualify for relief from income tax and profits tax.
463 Another form of assistance, as my noble friend Lord Gifford has already said, would be an extension of capital allowances. I understand, for instance, that these allowances can be claimed on the cost of such items as furniture, curtains, carpets and linoleum, but not, for some reason, on linen, cutlery, plate, glass and china, which are all essential tools of the trade. Another suggestion is that interest-free loans might be given on the lines of the National Industrial Fuel Efficiency Service, which has greatly assisted the installation of modern equipment designed to effect economies in fuel. For hotels, a similar sort of scheme might be put into operation to cover the costs of such work as the installation of new bathrooms and central heating, both of which are demanded by the overseas visitor to-day.
Another possibility which Her Majesty's Government might consider—and my noble friend Lord Gifford has also touched on this—is the possibility of de-rating. My noble friend has emphasised the need for encouraging the building of new hotels in London, and in my opinion he has made out a strong case for this and has contributed many useful suggestions. I have dwelt more on the need for helping existing hotels to expand and modernise. My hope is that Her Majesty's Government will be able to do something to help both of us. As I see that my noble friend Lord Mancroft is to reply, as he always seems to do on the few occasions when I have the temerity to address your Lordships' House. I am full of hope.
§ 6.43 p.m.
§ LORD LAWSON
My Lords, I think there must be general regret that this debate has come at the end of a long day. It deals with accommodation for visitors to this country, and one of the things I have been pleased to notice, particularly during this summer season, has been the number of visitors from every part of this country, not only going about this great city, but particularly visiting the Houses of Parliament. I say that in order to point out that, so far as increasing the number of visitors is concerned, I should welcome some sort of consideration to it. But let the House be fully conscious of what it is considering— 464…to consider creating more favourable conditions to those wishing to make economical use of valuable sites in the West End for the erection of large modern hotels.…Now the people who can supply the capital for valuable sites in this great city are comparatively few, and I suggest that this is a piece of special pleading for a particularly small class of people who, so far as I can see, are well able to look after themselves. I would suggest to the Government that they think seriously about this matter before they make any concessions at all. In his Motion the noble Lord is asking for this special privilege to be given to a very small class of people who are more than able to look after themselves. So I suggest to the Government that they should be careful before they give any promise such as has been asked for to-day.
May I interrupt the noble Lord for one moment? I am not interested in development as such. I am interested in getting these hotels built, so that this country can earn the dollars. If building hotels was a profitable and economic project in present conditions, they would be built. But they just are not being built, and therefore I think some encouragement needs to be given.
§ 6.46 p.m.
§ LORD BARNBY
My Lords, this is a most interesting subject. I personally have no interest in hotels, and I know nothing about how to run one, but I am often a guest in a hotel—and I refer particularly to the Provinces and not to the Metropolis. I would echo the words of my noble friend Lord Jessel, that we owe a debt of gratitude to my noble friend for moving this Motion. I say that with a profound belief that there is something wrong, and that the lack of proper accommodation and in the services which are given in hotels in this country, particularly in the Provinces, is marked. In that I should find myself in complete disagreement with the noble Lord, Lord Lawson. Far from caring whether the hotel people can look after themselves, what I want is that the people who run hotels should look after their guests. That is a much more important point. It is because I find the services given to guests in the Provinces so infernally bad that I particularly support my noble friend.
My noble friend laid emphasis on the Metropolis. I repeat that I think more 465 of the Provinces. I say this because all those in the big industrial cities want to see as guests the buyers of our products and our machinery, and those who are going to bring skilled knowledge to us. I am confident that compared with hotels in North American towns of much smaller size than our big cities the facilities are insufficient. I will not mention the names of any cities, but your Lordships can all look at the population figures, and many big cities in this country have appallingly poor hotels. The service they give would not be accepted in North America.
There is no need to support at length the recommendations which my noble friend made, but with the indulgence of the House I should like to add one or two personal reasons why I feel there is scope for something to be done. Much has been said about the finance of hotels. My noble friend suggested a finance corporation, and that thought should be given to the structure of the Trade Facilities Act which was passed after World War I. Much of its terms could be applied to this particular problem. I suspect that in the operation of these hotels there must be difficulties because the reward is not sufficient to produce efficiency.
My noble friend referred to amenity, and other similar questions. He omitted to refer to one matter, and I should regard this as an important one—that is, the cooking in the hotels. Take the cooking of simple things like vegetables—it is deplorable. There is no training for cooks in this country, and I would submit—and I hope my noble friend who replies will not omit to make a note of this—that if the Home Office would licence the importation of more foreign cooks who know how to cook, they could teach more people in this country and we should be, I am sure, better off. We recently had a debate in this House on the general projection of this country's advantages to the world. What is the good of spending a great deal of money on that if the tourist trade, which has made the most important contribution to our balance of payments position, is impaired by reason of insufficient accommodation to receive the tourists when they come here?
I could have hoped that many more Members of your Lordships' House would have come this afternoon to 466 support my noble friend in this Motion, because there is undoubtedly substance in it. I suppose that the frugal habits of this country make the operation of hotels at week-ends, when people eat at home and will not eat at hotels, difficult; but whatever the reasons are, there should be sympathetic support for the Motion. I am glad that the noble Lord, Lord Mancroft, is going to reply. He is, as should be the case, a particularly well-qualified judge of good food and good comfort. He has in addition a particularly acute commercial brain, and with all those qualifications I hope he will, as I believe he will, give sympathetic reception to my noble friend's Motion. I trust we shall get some encouragement to hope for concessions of the character that my noble friend has raised. I have much pleasure in supporting the Motion.
§ 6.52 p.m.
§ THE EARL OF LUCAN
My Lords, it is surprising how the most innocuous-sounding subject can bring up quite controversial matters, and while we have every sympathy with the noble Lord, Lord Gifford, in his ambition to increase the possibility of earning dollars and foreign currency in this country, his speech and the subsequent speeches raise one or two matters on which I hope the noble Lord the Minister will comment. We had, of course, the financial side, and I thought it a pity that the noble Viscount, Lord Hailsham, was not here, because there were echoes in it of his speech in the last debate, on the Finance Bill. It seamed to me that there were some traces of pleading for special treatment for special interests, which the noble Viscount castigated in his speech. Then we had the attack on the planning legislation of this country and particularly of this city. I should like to remind the noble Lord, Lord Mancroft—I am sure he has remembered it—that we as Londoners have to live here all the time; the planning regulations are designed to safeguard our city and to prevent undue congestion in the central areas of London.
§ LORD BARNBY
May I remind the noble Lord that one of the Members of this House raised the question of the improper siting of the Westbury Hotel; it seemed the most stupid place in London to put it. There were only three noble 467 Lords who took the trouble to support the one who raised the opposition to it. I raised it.
§ THE EARL OF LUCAN
I thank the noble Lord. I am sure that many noble Lords read the account in Hansard.
We also had mention of the Catering Wages Act—a very big subject, and a highly controversial one. It was one of the points the noble Lord mentioned in his speech. Finally, there is the question of the standards which the noble Lord, Lord Gifford, is advocating. He talks of hotel interests planning hotels with 700 rooms—I think he said double rooms, each with bathroom and dressing room. I wonder how many of our visitors are really prepared to spend the sums that would represent in room rent. This summer I have seen a number of visitors from overseas, America and Canada. And most of the complaints I have heard have not been that they cannot get rooms of the right standard but that they cannot get rooms at the right price. Many of them would be quite willing to go a little outside the centre of London, and I suggest that the planning authorities should be slow to give permission for further development of this kind right in the middle of London. Let there be development on the Underground lines outside London, from which access to the centre is very easy, but do not let us clutter up the centre with too much new building.
§ 6.58 p.m.
§ THE MINISTER WITHOUT PORTFOLIO (LORD MANCROFT)
My Lords, I can assure your Lordships that Her Majesty's Government do indeed recognise the importance of the British hotel industry. It is, of course, an integral part of the whole tourist trade, and our tourist trade last year earned£128 million. This year we hope that the constantly increasing number of overseas visitors will spend nearly£140 million in this country. About 9s. 6d. in every one of those pounds is spent in hotels and restaurants. One first-class hotel bedroom can earn between£3,000 and£4,000 a year in foreign currency. This means, if I have done my sums right, that a hotel of about 500 bedrooms can earn at least£1½ million a year in foreign currency. I repeat, therefore: the Government fully recognise the importance of the hotel industry.
468 There is a sharp contrast between the rapid growth of transport capacity, especially in the air—a capacity that is obviously likely to increase—and the static condition of the hotel industry. This, unfortunately, is a fact. It will be one of the main questions which will be studied in the course of a review of the long-term prospects of the tourist trade as a whole which the Board of Trade and other Departments are about to undertake. This review is intended to follow up the important conference on tourism, to which my noble friend Lord Gifford referred, held in May by the British Travel and Holidays Association, at which many proposals were put forward for expanding the tourist trade. All these proposals, which include, incidentally, most of the specific points your Lordships have raised this afternoon, will he carefully studied.
The general economic principle of the Government's policy by which these problems will be judged is as follows. The industry as a whole is largely in the hands of private enterprise. Last year, the number of tourists was three times what it was ten years ago. The Government hope that this evidence of a growing demand for new hotel accommodation will encourage confidence in the hotel industry and stimulate more private investment. There is, indeed, evidence of a renewed business interest in hotels. In the last year or so the financial position of the hotel industry clearly improved. The profits of those companies in the hotel industry whose accounts were published during 1957 were about 20 per cent. higher than in 1956. This figure, I admit, is unevenly spread. London, for instance, is much better off than the seaside resorts.
The Government's job, as I see it, is to let the hotel business get on with its business, rather than to interfere, yet at the same time to help to create the right atmosphere of confidence—especially in the City—in which that business can flourish. A number of suggestions have been made about the ways in which the Government could help, and these will all be carefully and sympathetically examined. There are, as your Lordships will appreciate, and as the noble Earl, Lord Lucan, and the noble Lord, Lord Lawson, have rightly pointed out, obvious difficulties about granting Govern- 469 ment subsidies to one particular industry. If to the hotel industry, which earns dollars, then why not to the motor industry, for instance, which also earns dollars? In any case, assistance of this kind inevitably involves Government inspection and control, and I do not think that that would be welcomed by the hotel industry in general, or even by the Gordon Hotels, in particular.
There is another difficulty. There are about 50,000 hotels and boarding houses in this country; and a great many of them are obviously more concerned with catering for the domestic holiday maker than for the foreign tourist. The Dorchester and, say the Seaview Private Hotel (" Dogs not admitted ") raise slightly differing problems. Any form of financial assistance to the industry would therefore either have to be selective, which would raise difficulties about distinguishing tourist hotels from others, or it would have to be given to a great many establishments which earn little or no foreign currency. I do not want to pour cold water on the schemes which have been put forward, but these are just the kinds of problems which the Board of Trade inquiry will have to sort out.
I do not want to prejudge the issues, but let me offer one or two observations on other points that are bound to crop up. My noble friend Lord Gifford suggests, for instance, that modernisation costs of hotels should be treated as trading expenses. Hotels are treated in the same way as other businesses, so far as being able to claim tax relief on repairs and maintenance. If we were to follow Lord Gifford's suggestion we should, of course, be placing hotels in a better position than any other class of business, industrial or otherwise. Improvements generally, moreover, in any non-industrial buildings are treated as capital expenditure for tax purposes: they do not qualify for tax relief. Your Lordships may ask "Well, why not make an exception here? Hotels are, after all, a great dollar earning business." Then I would say again: What about the insurance industry? That is also a big dollar-earning business. I think your Lordships will see that like so many of these suggestions, this matter is not quite so straightforward as it looks.
470 Take depreciation allowances. At present these are given only in respect of industrial buildings. Your Lordships will remember, of course, that hotels, like other industries, can claim depreciation allowances on such items as lifts, furniture and carpets. But here again I think it would be difficult to distinguish between non-industrial buildings such as hotels and buildings such as the new Lloyd's. This obviously presents a real problem—but it is a problem I think we shall have to look at carefully again.
What about the question of de-rating, which the noble Lords, Lord Jesse] and Lord Gifford both mentioned? As your Lordships know, the industry is at present de-rated to 25 per cent., but is to be re-rated to 50 per cent. Once again I think it would be difficult to distinguish between commercial premises, such as hotels, and other commercial premises such as shops or offices. The valuation of hotels for rating purposes already makes due allowance for their seasonal nature. And your Lordships will, of course, remember that hotels secured 20 per cent. de-rating as recently as 1957. I must point out, therefore, that there are sizeable arguments against the fresh de-rating of any particular class of property. Only within the past few days the Local Government Act received the Royal Assent. This Act has the strengthening of the rating system as one of its main objects. It is in this context, and in the knowledge that any extension of de-rating adds appreciably and immediately to the rate burden of all other ratepayers, that any proposal to give hotels a larger measure of de-rating would have to be considered.
The most difficult example of drawing the line between hotels and other businesses occurs when we come to purchase tax. That it is a burden on the hotel industry. I do not deny; but a great many other people also think it is a burden on them. The honourable Member for Kidderminster, Mr. Gerald Nabarro, does not let us forget this argument; nor have any convincing figures been put forward by the hotel industry to show precisely what sort of burden it is.
It is levied only at 5 per cent. on furniture; on most other items used in hotels the rate is only 15 per cent. I readily admit that purchase tax is a heavy burden when a hotel is being 471 furnished for the first time. It cost the Leofric Hotel at Coventry, I believe, nearly£35,000. I really do not know, however, how we could work out a satisfactory scheme for distinguishing between goods to be used in the hotel industry and those for ordinary domestic use. Purchase tax, your Lordships will remember, is levied at the wholesale stage by reference to the nature of the goods and not to the purpose for which they are to be used. Where again, therefore, does one draw the line?
What about a special loan? Here there is one strictly limited field in which the Government can possibly make loans to finance the construction of an hotel. I mentioned this to your Lordships on the Second Reading of what is now the Distribution of Industry (Industrial Finance) Act, 1958. The Government now have power to make loans for any purpose likely to reduce, or contribute to the reduction in, the rate of unemployment in any locality in which a high rate of unemployment exists and is likely to persist. I hope that this provision may attract new people into the hotel industry. Such areas as the Highlands and the Islands, or parts of Devon and Cornwall, might conceivably qualify for a loan under these powers. The principal purpose of the Act, I must remind your Lordships, however, is to relieve unemployment, rather than to assist the hotel industry.
My noble friend Lord Gifford has suggested that planning authorities could be more sympathetic, particularly with reference to multi-storey hotels. We are told that this is the only way that large new hotels can be made to pay. I can assure the House—and I am pleased to do so—that neither planning requirements nor the building by-laws stand in the way of new hotel construction, whether the hotel is to have three storeys or thirty. There is no preconceived objection to high buildings in London, though many people seem to think there is. What there is objection to is badly sited or badly designed buildings—and rightly so. I agree with the noble Earl, Lord Lucan, that a new building should not only look civilised but should be a good neighbour and fit well into its environment. This, surely, is particularly important if it is going to be a skyscraper. 472 Some hotel promoters have sought permission to erect huge buildings on sites which were much too small to take them. Your Lordships will be aware of the proposal to erect a new hotel of 700 bedrooms just north of Londonderry House, in Park Lane. This would not only have loomed up to roughly the same height as Salisbury Cathedral, but would have been four times bulkier than the size of building which the recognised planning standards would otherwise have permitted on that particular site. It would have stuck out like the proverbial sore thumb. The Government therefore called in the application and refused permission. I am sure that that particular decision was right, but it was not taken just because the proposed hotel was to have been 400 feet high. The promoters, incidentally, have now made another application for two different designs for a smaller hotel of 530 bedrooms on the same site, and this is under consideration.
Meanwhile, as my noble friend Lord Jessel told us, my right honourable friend the Minister of Housing and Local Government has granted planning permission for another tall hotel, containing 700 bedrooms, on a larger site in Lancaster Gate. This building will be slightly less than twice as bulky as the maximum prescribed by planning standards for that particular site, but it will not dominate its surroundings anything like so badly as did the Park Lane example. I hope your Lordships will realise from this that the planners are indeed prepared to relax the standards to a considerable degree in order to encourage hotel promoters. Altogether since the war, planning permission has been granted for eight new hotels in London. These would produce nearly 4,000 bedrooms. They would also produce nearly as many bathrooms, which a few British hoteliers still seem to regard as an unnecessary refinement; and only yesterday the London County Council granted planning permission for a hotel of 255 bedrooms on seventeen floors rising to a height of 170 feet just south of Londonderry House at 11–15, Park Lane. In addition, as your Lordships know, the L.C.C. are now considering an application for permission to build an hotel of 1,000 rooms on the Trocadero-Corner House site near Piccadilly Circus.
I readily admit that only one complete new London hotel, the Westbury, has actually been built. My noble friend 473 Lord Jessel referred, however, to the extensions that have been carried out to Mount Royal, Grosvenor House, the Washington, the De Vere, the Tavistock and several other hotels, not forgetting the penthouses at the Dorchester. Altogether 600 new rooms were added to London hotels in 1957.
There has been a good deal of activity out of London, too. In addition to the Leofric at Coventry, there is the highly original Dover Stage Hotel which caters especially for cross-Channel coach tourists. Recent extensions include doubling the accommodation at the Chaucer Hotel in Canterbury, and an ultra-modern studio-wing (whatever that may mean) just opened at the Imperial, Torquay. Modernisation (especially adding bathrooms) can obviously be as important as new construction in coping with the tourist demand. The brewers have set a good example in the Grand, Leicester; and the Royal and Queens, Cardiff.
But fashions change. Malvern, for instance, has far too many hotels. My tobacconist, who used to go to Cromer, now goes to the Costa Brava. More and more visitors now bring their cars to Britain; and here I agree with the point made by the noble Lords, Lord Barnby and Lord Lucan, that there are other parts to this country than Edinburgh, Stratford-on-Avon and London. We have to persuade visitors to spread their custom more widely. If we are to get the best value for money out of our hotels, we may even have to change our own views about the right month to take a holiday and the wrong hour to take a drink. We may also have to persuade a few lazy hoteliers that the Catering Wages Act does not prohibit them or their wives from rustling up a plate of bacon and eggs for a benighted traveller who arrives when the chef is off duty.
-Your Lordships will see then that more is afoot than is generally realised. But I do not deny that the business is a chancy one, and to open a new hotel in Britain calls for courage as well as cash. There is many a slip between the blueprint and the grand gala opening day of the new hotel. Planning permission does not automatically result in the appearance of financial backing for the building. I cannot, therefore, guarantee that all the 4,000 rooms for which planning per 474 mission in London has been granted will necessarily see the light of day; but what I will guarantee is that this Government have not stood and will not stand in the way, through over-nice adherence to planning rules, of any bona-fide application to make more hotels available both in London and in the country.
The points made in this debate will be carefully considered in the inquiry which I have told your Lordships is now under way. Her Majesty's Government fully recognise the contribution made by the hotel industry to our economy. New hotel building has not kept pace with the expansion of tourist traffic and transport capacity since the war. Tourists will not come if there is nowhere for them to lay their heads.
There are, however, serious objections to singling out this industry, important though it is, for special help which will be denied to other dollar earners. The scope for Government help or interference is of necessity limited. Her Majesty's Government look to private enterprise to meet the challenge of the expanding traffic; but the Government will do everything that is reasonable and possible to improve and sweeten the atmosphere in which that challenge can be met. We must now look carefully at the Tourist trade as a whole and see what is reasonable and what may be possible.
§ 7.15 p.m.
My Lords, I should like to thank the four noble Lords who have supported my Motion at this late hour of the evening. I am very grateful to them. I believe that when the noble Lord, Lord Jessel, reads my speech he will see that I appealed for help for improvements as well as for new buildings. I am glad to hear from the noble Lord, Lord Mancroft, that an inquiry by the Board of Trade will shortly take place. I am also grateful to the noble Lord for his sympathetic answer.
I should just like to say that I believe that it is quite possible to be selective about this matter and that a committee of some finance corporation could review each case on its merits as a dollar earner. I do not think it is necessary to give the same help to the whole industry. I should say also that, pound for pound, the help given to the hotel industry will bring in far more foreign currency than 475 anything else, including insurance. We have had a comparatively short debate because of the hour, but possibly when the report of this Board of Trade inquiry is published it might be a good thing to put down a Motion in wider terms for discussion in the next Session. I should again like to thank the noble Lord, Lord Mancroft, and all who took part in this debate, and beg leave to withdraw my Motion.
§ Motion for Papers, by leave, withdrawn.