The government is facing fresh calls to extend its business rates relief scheme for pubs to include hotels, as the accommodation sector grapples with sharp increases in taxes, wages and operating costs.
The appeal has been made by leading audit, tax and business advisory firm Blick Rothenberg, which warned that hotels are under growing financial strain and risk job losses without targeted support.
Darsh Shah, a partner at the firm, said ministers were planning to boost the £4.3 billion relief fund designed to help pubs manage rising business rates, but argued that hotels should not be excluded.
“Hotels are bearing the brunt of a number of tax and running cost increases,” Shah said. “Some are facing their rateable values increasing by more than 300 per cent this year, while also having to absorb higher national insurance contributions and a rising national minimum wage.”
He said a dedicated support fund, similar to that offered to pubs, would allow hotels to phase in business rate increases over three years, easing immediate financial pressure.
Shah also warned that recent policy changes allowing English mayors to introduce tourist levies on overnight stays could further undermine hotel finances. While the tax would be paid by guests, he said there was a real risk that customers would resist higher prices, squeezing margins and threatening employment.
“Hotels may be forced to pass on these additional costs, but guests may simply not be prepared to pay more,” he said. “That could harm hotel finances further and put jobs at risk.”
However, Shah said the levy could be turned into a positive if a proportion of the funds raised were redirected back into the sector. He suggested revenues could be used to offset rising rateable values or help hotels manage soaring utility costs, noting that average electricity unit prices for non-domestic users rose by 92 per cent between 2021 and 2023.
He added that levy income could also be used to support hospitality training and apprenticeships, helping to address skills shortages while benefiting young jobseekers and older workers looking to retrain.
Industry figures echoed the call. Frazer Callingham, managing director of Starboard Hotels, said hotels had faced the same cost pressures as pubs for years, yet were being overlooked.
“Hospitality was one of the industries worst hit during Covid and now seems to be bearing the permanent brunt of the most damaging cost and taxation changes,” Callingham said. “To add unconsidered increases in business rates on top of this is both unfair and unjust.”
He said employment costs alone had risen by double digits over the past three years due to increases in the minimum wage and national insurance, while suppliers and other operating expenses had also become significantly more expensive.
“We are the last line before the end consumer,” he said. “While hotels can flex pricing more than some industries, we are still demand-driven. We can only pass on costs at a level guests are willing to pay.”
Callingham also criticised the impact of recent revaluations by the Valuation Office Agency, saying they had dwarfed the benefit of the chancellor’s review of the business rates multiplier.
“Before any review or challenge, some hotels have seen rateable value increases of up to 300 per cent, with our estate averaging an 85 per cent rise,” he said. “All of hospitality needs to be reviewed alongside pubs if the sector is to survive.”
During and after the pandemic, hospitality businesses benefited from a 75 per cent discount on business rates, which has since been reduced to 40 per cent and is due to end entirely in April 2026. Shah said the government should consider extending the discount or phasing it out more gradually, alongside introducing targeted funding to help hotels manage the transition.
Without action, advisers and operators warn that rising business rates could become the final pressure point for an industry already struggling to recover from the combined effects of the pandemic, inflation and higher employment taxes.
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UK government urged to extend business rates relief to hotels amid mounting tax pressures
