The government is facing fresh calls to extend its business rates relief program for pubs to hotels as the accommodation sector struggles with sharp increases in taxes, wages and operating costs.
The appeal was lodged by leading auditing, tax and business consultancy firm Blick Rothenberg, which warned that hotels are under increasing financial strain and risk losing jobs without targeted support.
Darsh Shah, a partner at the firm, said ministers planned to increase the £4.3bn relief fund designed to help pubs cope with rising business prices, but argued that hotels should not be excluded.
“Hotels are bearing the brunt of a number of tax and operating cost increases,” Shah said. “Some face seeing their tax bill rise by more than 300 percent this year, while also facing higher National Insurance contributions and a rising national minimum wage.”
He said a special support fund, similar to that offered to pubs, would allow hotels to make gradual increases in business rates over three years, easing immediate financial pressures.
Shah also warned that recent policy changes allowing English mayors to introduce tourist taxes on overnight stays could further undermine hotel finances. While the tax would be paid by guests, there was a real risk that customers would resist higher prices, cutting into margins and putting jobs at risk, he said.
“Hotels may be forced to pass on these additional costs, but guests may simply be unwilling to pay more,” he said. “That could hurt hotel finances even more and put jobs at risk.”
Shah, however, said the levy could be turned into a positive if some of the funds collected were channeled back into the sector. He suggested the revenue could be used to offset rising tax values or help hotels cope with rising utility costs, noting that average electricity prices for non-domestic users rose 92 percent between 2021 and 2023.
He added that levy revenue could also be used to support training and apprenticeships in the hospitality sector, helping to address skills shortages while benefiting young jobseekers and older workers looking to retrain.
Industry experts agreed with this demand. Frazer Callingham, managing director of Starboard Hotels, said hotels had faced the same cost pressures as pubs for years but had been overlooked.
“Hospitality has been one of the hardest hit industries during the coronavirus crisis and now appears to be continuing to bear the brunt of the most damaging cost and tax changes,” Callingham said. “Adding this to ill-advised increases in business rates is both unfair and unjust.”
He said employment costs alone have increased by double digits in the last three years due to increases in the minimum wage and social security, while suppliers and other operating costs have also become significantly more expensive.
“We are the last line in line for the end consumer,” he said. “While hotels can adjust their prices more than some other industries, we are still demand-driven. We can only pass on costs at a level that guests are willing to pay.”
Callingham also criticized the impact of recent revaluations by the Valuation Office Agency, saying they had overshadowed the benefits of the Chancellor’s review of the business rates multiplier.
“Prior to a review or challenge, some hotels experienced a measurable increase in value of up to 300 percent, with our property experiencing an average increase of 85 percent,” he said. “The entire hospitality sector needs to be reviewed along with pubs if the sector is to survive.”
During and after the pandemic, hospitality businesses benefited from a 75 percent discount on business rates, which has since been reduced to 40 percent and is due to phase out completely in April 2026. Shah said the government should consider extending the rebate or phasing it out, while introducing targeted funding to help hotels manage the transition.
Consultants and operators warn that without action, rising business taxes could become the final pressure point for an industry already struggling to recover from the combined impact of the pandemic, inflation and higher payroll taxes.
