Hotel industry chiefs are urging the chancellor to extend the exemption for businesses other than pubs
More than 130 hotel and holiday park chief executives have written to the chancellor, Rachel Reeves, warning that Labour’s planned changes to business rates represent the biggest threat to the sector’s viability and should not be limited to pubs alone.
In a letter compiled by UKHospitality, industry leaders say the government’s proposed disaster relief package leaves large parts of the hospitality industry “hanging out to dry”, despite facing similar cost increases.
Signatories include senior figures from Butlin’s, Hilton, Travelodge and Whitbread, as well as Haven, IHG Hotels & Resorts, Leonardo Hotels, Marriott International and Parkdean Resorts.
The intervention comes amid continued criticism of the labor reforms at the business level, which officials say will lead to closures, job losses and higher prices for consumers if not addressed.
According to analysis by UKHospitality, the average cost of living in the hotel business is expected to increase by 115 per cent over the next three years, adding around £205,200 per property. The sector is expected to be among the most affected by the changes due to the increase in prices and the withdrawal of services during the pandemic.
In their letter, industry leaders warned that it was “vital” that the government deliver a “sector-wide solution” rather than focusing on pubs, as ministers scramble to finalize an aid package expected to be announced in the coming days.
“These changes in business standards pose a major challenge to accommodation providers in terms of their continued operations,” the letter said. “Many businesses will face difficult decisions about employment and their ability to invest.”
Executives added that hotels and holiday parks would not be able to “easily absorb” the extra costs, warning that higher prices would inevitably be passed on to consumers, exacerbating cost-of-living pressures.
“We therefore urge you to consider the accommodation sector when considering any support measures to address these crippling changes,” the letter concluded.
The warning follows criticism from industry leaders in recent weeks. Sir Rocco Forte said last week the situation was “a mess for government” and accused the Treasury of failing to understand the impact of its policies.
Jo Boydell, chief executive of Travelodge, said: “Hotels cannot be hung out to dry on business rates.”
Simon Vincent, Hilton’s president for Europe, the Middle East and Africa, said the upcoming price hike, combined with higher contributions to employers’ national insurance, energy costs and tourism taxes, “had an impact on profitability and threatened jobs and growth, and was completely avoidable”.
While pubs have staged high-profile protests, including banning Labor MPs from the premises, hoteliers argue that the wider hospitality sector is facing similar pressures, without the same political attention.
In the Budget, Reeves announced a “recurring” reduction in business rates used to calculate debt, but also confirmed that Covid-19 discounts for retail, entertainment and tourism will be scrapped. Combined with the increase in property prices following the post-pandemic trade boom, the net result for many users is very high debt.
The row was compounded by comments from the chief executive of the Valuation Office Agency, Jonathan Russell, who suggested ministers knew before the Budget that rates would rise – contradicting claims by Business Secretary Peter Kyle that the Treasury did not have access to the right data.
Hospitality leaders are now urging the chancellor to act quickly, warning that a failure to extend relief beyond advertising places risks investment, employment and growth in one of the UK’s most important sectors of the economy.
