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Hospitality firms face significant rises in business rates

02 October 2009
Hospitality firms face significant rises in business rates

Hospitality businesses are being advised to brace themselves for significant increases in business rates, due to be announced today (2 October).

The new rates, which are based on valuations taken for all commercial properties in April 2008, will come into effect on 1 April 2010, but have already been criticised by industry figures for not factoring in the recession.

Their concerns stem from the fact that the basis for calculating rates for the next five years have been based on a snapshot of the market taken when hotels in particular were experiencing a boom.

Businesses will be notified of the increased values by the Valuation Office Agency in October and should expect that future rate bills will be increased.

David Jones, director at property consultant GVA Grimley, described the rates as "painful", commenting: "The hotel sector will suffer as a result of the 2010 national rating revaluation. Margins will be affected, in some cases severely. It is essential hotel businesses reflect these budgetary changes now and ensure they are taking action to reduce any impact where possible."

Research carried out by the consultancy suggests increases for three-star-plus central London hotels will range between 40% and 60% with four-star and five-star being the worst affected, some increases reaching as high as 100%.

It also expects that hotels in the regions will experience average increases of between 25% and 35% with some well-located central city and airport sites experiencing a doubling in value.

Jones advises operators to start making realistic 2010 budgets and suggests early appeals could result in a lower rateable value before the list comes into force.

Hospitality industry gives muted reaction to business rate reprieve >>

Business rate rise will add millions to hospitality tax bill >>

Half of rural pubs missing out on business rate relief >>

By Rosie Birkett

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