Hoteliers should be able to appeal against their business rates as the result of the disruptive influence that Airbnb has had on the market, according to property agency Colliers International.
The Valuation Office Agency (VOA), which undertakes business rates appeals, normally looks favourably on businesses that can show a “material change in their circumstances”. Colliers believes hotels in locations where Airbnb is strong and growing should be included in this policy.
Many hotel operators are currently facing a massive increase in the business rates they are liable to pay following the recent April 2017 revaluation. Colliers said that hotels at every level of the market is impacted, with the five-red-AA-star, 45-bedroom 45 Park Lane, facing a 131.1% increase in rateable value to £1.34m under the revaluation, and the Z hotel on Piccadilly, which operates in the budget sector, facing a 114.7% rise to £585,000.
Nearly 50% of all Airbnb bookings in the UK last year were focused on the London boroughs of Westminster, Tower Hamlets, Kensington, Chelsea and Hackney. Hotels in these areas of London, along with operators in busy tourist cities such as Oxford and Bath that also attract a high number of Airbnb listings, should consider appealing against their rate bills, urged Colliers.
John Webber, head of rating at Colliers International, said: “Not only is Airbnb attacking hotel market share, by offering cheaper room rates, but is able to do this through the unfair advantage of not paying business rates.”
“The quantity of additional rooms being made available by Airbnb is equivalent to the building of several hundred new hotels across the UK. Yet should these hotels have been built, the VOA would accept “a material change of circumstance” to the hotel operators’ business.”
The impact of Airbnb on the London market is highlighted by research from Colliers International and the Hotelschool in The Hague which shows that the number of nights booked with the online site in the capital increased by 130% in 2016 year-on-year to 4.62 million.
“We would argue that the advance of Airbnb rooms let in close proximity is a “material change” and hotel operators should appeal their rateable value and hence their rates bill, before they take a financial turn for the worse, which would affect both profits and jobs in the trade,” continued Webber.
A spokesperson for the VOA said that all hotel operators are entitled to check the rateable value of their hotel, but under the existing rules it is not certain that the presence of nearby Airbnb outlets would be regarded as representing “material change”.
He confirmed: “If any ratepayer thinks the details we hold about their property are incorrect, they can see exactly how their valuation has been calculated and update underlying facts by registering with our check and challenge service. When looking at material changes in circumstance, the law allows us to take only physical or manifest changes to a property (or its locality) into account. Economic factors – such as a fall in footfall – do not constitute an MCC. This type of fluctuation is the reason for regular revaluations.”
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