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Burnham’s hotel tax risks killing off tourism, warns Ryanair

Michael O'Leary
Michael O'Leary, the Ryanair chief executive, criticised the Prime Minister's tax plans - Yui Mok/PA

Andy Burnham risks killing off tourism with his plans to heap taxes on foreign visitors, the Ryanair boss has warned.

Michael O'Leary said that piling a hotel tax on top of existing levies on flights will lead international travellers to desert the UK and holiday elsewhere, devastating regional economies.

The chief executive said that if Labour was intent on taxing hotel stays it should abolish air passenger duty (APD) to encourage more people to come in the first place.

"At least get your visitors into the country first before you tax them," he said.

Mr O'Leary has criticised the Prime Minister over his move to hand English mayors the power to impose uncapped "overnight visitor levies" on hotels, holiday lets and bed and breakfasts.

This will drive up the cost of visiting Britain for foreign holidaymakers, who already have to pay a £15 departure tax on short-haul flights.

He said: "You can't tax tourists on the way into the UK and then double tax them for the hotel night. But that is the Labour plan, which is always the plan with Labour: more tax and even more spending and less economic growth.

"It is stupid and doomed to fail. Low-cost access is vital for regional tourism, regional jobs, and growth. Regional UK airports have excess capacity.

"There's lots of room available to grow in Birmingham, Bristol, Manchester, Edinburgh, Glasgow."

The Irishman said the Prime Minister was "ill-educated" if he thought a return to a pre-Thatcherite regime of ultra-high taxes was compatible with stimulating growth.

He said: "Andy Burnham, whose grasp of history is somewhat flimsy, believes that the last 40 years have been a tragic mistake. He clearly doesn't remember or wasn't around.

Ryanair plane
Michael O'Leary, the boss of Ryanair, says low-cost access for tourists is vital for regional tourism - Sakis Mitrolidis/AFP via Getty Images

"The '60s and '70s was an era of three-day weeks, the IMF running the economy and the unions destroying most of the industrial base. The UK was the sick man of Europe.

"But in the '80s and '90s the UK was growing strongly following Thatcherite policies. More competition, more efficiency and the deregulation of things like the stock market, which have been huge successes.

"So if he thinks going back to the '60s and '70s is the way forward to deliver growth in every postcode, he is sadly mistaken.

"If there's more taxes in the Budget then I think the bond market will take care of Burnham and the Labour Government. If they don't fundamentally cut spending and some selective taxation then they're doomed to fail."

Mr O'Leary said Mr Burnham's plan to reindustrialise Britain was "fundamentally flawed" given far lower labour costs in China, and that he should accept that the economy needed to focus on the services sector, including tourism.

He said that while London's tourist trade might survive the hotel tax onslaught, "it would do untold damage to regional tourism".

Scrapping APD would cost Britain about £2.5m a year, which would be recouped within 12 months through a jump in traffic and the opening of newly viable routes, the Irishman claimed.

Ryanair alone would base 30 more jets at UK airports, lifting passenger numbers by more than a quarter to 80 million, adding 200 routes and creating 10,000 jobs by 2030, he said.

That is compared to potentially scaling back of operations if taxes are raised.

He said: "We're actively switching capacity away from those countries who are raising taxes towards countries who are abolishing taxes, of which there are many. Sweden, Slovakia, regions in Italy, Albania, Hungary have all abolished their environmental taxes on air travel."

Mr O'Leary issued the warning as he predicted that high oil prices could trigger a 20pc jump in airfares next summer.

He also repeated calls on Wednesday for the sacking of Martin Rolfe, head of National Air Traffic Services (Nats), after its latest IT meltdown grounded hundreds of flights .

The Ryanair boss urged Heidi Alexander, the Transport Secretary, to "stop waffling about new reports" and take action now.

Mr O'Leary said: "How many more screw-ups do we have to endure? How many more times does he have to come up with his own internal reports, marking his own homework, where it's 'nothing to see here, guv' or another 'the software ate my homework'?

"This guy's been sitting there for 15 years, getting paid £1.5m, despite delivering spectacular collapses every year. A 15-year-old would be more competent."

He added that both the Government, which owns 49pc of Nats, and airlines including British Airways and easyJet, which control 42pc, appeared unwilling to oust Mr Rolfe because he was paying out almost all of the firm's profits to them in dividends.

Separately, Mr O'Leary complained that an investor revolt over his €150m (£129m) bonus scheme would force Ryanair into 12 months of meetings while having no impact on the size of the incentive plan.

"Welcome to the world of f------ ESG and a lot of shareholder f------ meetings," he said. It comes after 40pc of shareholder votes rejected his pay deal.

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