Budget and London hotels could be hit hardest by possible business rate rises when the 2021 list is introduced, according to analysts at JLL.
A report from the real estate advisory firm on the upcoming 2021 revaluation predicts that rates will rise for the sector.
However it also predicted the increase would be milder than that implemented in 2017. In November The Caterer revealed more than 50,000 businesses had disputed the rates implemented over the period.
The JLL report noted that the rates are likely to increase in line with earning ability after a positive period for the sector.
The report states: “There can be no doubt that across the country revenue grew in most areas between the valuation dates for the 2017 and 2021 rating lists. In the 2017 rating list, hotels account for 3.28% of the total with a rateable value of £2.089bn. Of this total 48% (£1 bn) lies in London.
“This substantial rates burden is likely to rise for the 2021 rating list meaning operators will come under further pressure to reduce fixed costs and maintain operating profits.
“We predict a rise in rateable values in most locations for 2021 but not as large as the increases seen between the 2010 and 2017 lists, and perhaps not as widespread. Budget operators are likely to see the largest increases along with London hotels.”
However, the report noted that rates increases for hotels are unlikely to be as hard hitting as they were following the 2017 revaluation. It added: “Local supply situations will impact some areas, such as Heathrow, where a sizable increase in new rooms is impacting revenue growth. This means that, coupled with the fall in the rating multiplier and increasing inflation, the 2021 rating revaluation could be much more benign in the hotels sector than 2017.”