Business rate rise and planned tourist bed tax 'may force hotels to hike prices'
Hotels across England may be forced to hike their prices by at least £5 a night as they face the double whammy of a near-£800 million business rate rise and a proposed tourist bed tax, experts have warned.
The hotel sector is set to see its rates bills rise by a staggering £798 million over the next five years under April's revaluation, according to b usiness rent and r ates specialists CVS.
They calculate the sector's rates bill will increase from £681.2 million in 2016/17 to £840.8 million a year on average.
This alone could lead to a £5 a night increase in prices for short breaks, holidays and business trips in England on average.
But hotels are also bracing for a potential new tourist bed tax, which would be an extra charge for staying at a hotel or bed and breakfast, on top of the basic room rate and VAT charge.
Councils are already in talks with Sajid Javid, the s ecretary of state for communities and local government, to introduce the new tax as a way to raise income.
The proposals are being led by Councillor Charles Gerrish of Bath and North East Somerset, with the plans also being looked at by other authorities under the Sustainable Communities Act, which allows communities and councils to put forward ideas to government to solve local problems.
This comes on top of the extra funding in business rates they will collect, 100% of which they will be able to retain by 2020.
Mark Rigby, chief executive at CVS, said smaller independent hotels would be hit hardest by the rates rise and warned many were likely to consider raising prices.
He said: "S uch a drastic rise in business rates could also leave small independent owned hotels squeezed and, in severe cases, at risk of closure.
"It's disheartening to see that the budget-friendly hotels, those with a three star rating and which aren't operating as part of a chain will be disproportionately affected."
The figures from CVS show there are 6,764 hotels liable for business rates in England.
The April 1 rates revaluation is the first since 2010 and rising property values have meant many firms are facing mammoth rises, especially those in London and the South East.
Chancellor Philip Hammond sought to allay concerns over the changes with a £435 million relief package in the Budget earlier this month.
But many business leaders have called for an urgent reform of the system, which has been slammed for being unfair and out of date.