UK government should support hotels with a business rate relief fund
The government should extend the business rate relief fund for pubs to include hotels, say leading audit, tax and business advisory firm, Blick Rothenberg.
Darsh Shah, a partner at the firm, said: “The government is planning to boost the £4.3bn relief fund they have put in place to help pubs with increasing business rates. This fund should be extended to hotels, who are bearing the brunt of a number of tax and running cost increases.”
He added: “Some hotels face their ratable values going up by over 300% this year. On top of this they are contending with the increase in National Insurance Contributions (NICs) and Higher National Minimum Wage (NMW). A support fund, like the one in place for pubs, would allow hotels to phase business rates bill increases over three years, taking some of the financial pressure off.”
Darsh said: “English mayors can now introduce a tourist tax on hotels on overnight stays. Hotels have to pass the additional cost of this levy on to their guests, who may not be prepared to pay extra. This could further harm hotels finances, risking the jobs of their employees.”
He added: “However, the levy could benefit hotels if a proportion of the funds generated goes towards supporting them with the rise in ratable values. Alternatively, it could go towards utility costs, such as energy; between 2021 and 2023 average electricity unit price for non-domestic UK users increased by 92%.”
Darsh said: “Mayors could also use levy money to support hotels indirectly by funding hospitality training and apprenticeships in their jurisdiction. This also benefits young job seekers or older workers who want to re-train and expand their skillset.”
Frazer Callingham, the managing director of Starboard Hotels, a Blick Rothenberg client, said: “Hotels, as do all other hospitality businesses, face the same cost increases across every area of the business as the pub industry and have done so for several years post Pandemic. Hospitality as one of the industries worst hit during Covid, seem to be bearing the permanent brunt of the most damaging cost and taxation changes. To add to this pain with unconsidered increases in business rates is both unfair and unjust.”
He added: “In the last three years alone, there has been a double figure increase in employment costs (National Minimum Wage and NIC Taxation), rise in the general cost of sales, pass through price increases from all other suppliers and middle line expenditure has also risen.”
Frazer said: “We are the last line of business to bear the burden of any changes before the end consumer, our guests. And while we have the ability to flex our pricing unlike other industries, our business is demand driven. We can only pass on cost changes at a price the customer is willing to pay.”
He added: “While a review of the business rates multiplier by the chancellor was welcome, it was irrelevant when compared with the revaluation figures released by the Valuation Office Agency (VOA) of all assets issued the following day. Before review or challenge, some hotels have seen increases of up to 300% with our estate average at an 85% increase. All of hospitality needs to be reviewed alongside pubs in order for it to survive.”
Darsh Shah said: “During and after the Covid pandemic, businesses in hospitality had a 75% discount on rates. It has been reduced to 40% this financial year, and will end completely in April 2026. The government should consider extending the discount or phasing it out more slowly alongside providing funds to help hotels with the business rate rise.”