The dip in the UK’s economy was described as ‘significant’ to the travel industry by a PricewaterhouseCoopers analyst yesterday. Speaking at the Tourism Society’s Prospects for 2011, Liz Hall, head of hospitality and leisure research at PwC, said the susceptible nature of the economy on travel would be realised after all cuts have been made. “The UK public sector cuts are just setting in. There is a squeeze on consumers. We will all have less money to spend,” explained Hall. “Holiday travel is discretionary spending and we are probably going to find out how discretionary it is.” She revealed the company had projected a 9 percent increase in hotel revpar this year but will reduce this following the news that the UK economy dipped 0.5 percent. “We cannot say it is business as usual,” she said. “Uncertainty and risk are the key words. Many things in the world economy are not normal at all.” Hall indicated that the budget hotel market would be the sole growth earner this year as a result of household cutbacks. “Budget hotel [market] is really the only growth area,” she said. “[The market] has had a huge impact and has created a new market for people who stay in hotels. I think Travelodge and Premier Inn will benefit.” Meanwhile, Lib Dem MP Don Foster said a tax change could shift the hotel industry’s outlook. “Reducing VAT on hotels and accommodation could boost the industry but that won’t happen in the short term,” he said.