The chairman of the English Tourism Council attacked Britain's hospitality industry yesterday for not offering enough to lure foreign visitors and accused hoteliers of damaging the country's image with poor-quality accommodation.

Alan Britten told a CBI tourism conference in London there was no point in blaming the weather for a lack of interest among overseas holidaymakers. "Nobody ever came to England for unremitting sunshine," he said. "They come for the castles, the culture, the landscape, the heritage – and these things have not changed."

What did need to change, however, was the standard of hotels and bed-and-breakfasts. Their variable quality was "a subject of regular discontent" among visitors, he said.

Mr Britten spoke of a "savage" deterioration in the tourism balance of trade over the past five years, and said the foot-and-mouth epidemic had "added pleurisy to a patient already suffering from pneumonia".

The Secretary of State for Culture, Tessa Jowell, echoed his demand for the tourism industry to improve standards. "The average needs to be better, and the downright poor performers need to be much, much better," she said. "Twenty years ago, an en suite bathroom was a luxury, today it's a necessity. The entire industry – the good, the bad and the ordinary – needs to accept that constant change and improvement are essential."

But small businesses that are dependent on tourism were swift to hit back. Carol Hutchings, the chairwoman of the South Devon Tourism Association, said Ms Jowell had been "presumptuous to make that statement, having been in office for such a short time".

Ms Hutchings, who runs a miniature pony centre on Dartmoor, warned that without government help many businesses could not survive, let alone improve. "It is very unfair, when the industry is struggling, for people to be throwing sticks at us."

The assertion that en suite facilities were essential was disputed by Ian Cuthbert, proprietor of a bed-and-breakfast in Kettlewell, North Yorkshire. "As long as the place is clean and tidy, there is a market among walkers for simpler accommodation." The problem, he said, has nothing to do with standards. "People are frightened away. Yesterday we had a case of foot-and-mouth four or five miles away."

One insider warned that the impact could be most serious on small, independent businesses in rural areas that had done what the minister had urged, and invested in quality. "If they have used up their cash cushion in making improvements over the winter, they could be first to go."

Even before the epidemic culled millions of prospective trips, tourism in Britain was in for a third year of decline. The strength of sterling has deterred many European tourists, while cheap flights to the Continent and low costs in the Euro area have tempted prospective domestic tourists to go abroad.

The conference was told the foot-and-mouth outbreak could result in a fall of £7.5bn in tourist spending in Britain. London is predicted to lose £1.3bn, even though it is not directly affected by the disease.

The CBI's director general, Digby Jones, said: "The real, serious long-term effect of foot-and-mouth is going to be felt by the tourist industry, not by farming."