HOSPITALITY LEADERS SAY LABOUR POLICIES ARE PUSHING HOTELS TO THE BRINK

Britain’s hospitality sector is facing one of its most challenging periods in recent memory, according to senior industry figures who warn that recent fiscal decisions risk pushing already fragile businesses beyond breaking point.

Steven Hesketh, Managing Director of The Hospitality Hero and The Savvy Hotel Group, says changes announced in last year’s Budget are compounding cost pressures that have been building across the industry for years.

Hesketh, who operates hotels across the north west of England and Wales, argues that the cumulative impact of taxation, rising operational costs and increased business rates is undermining the long-term viability of many hospitality businesses.

“I’m furious about the recent Budget because businesses like mine are being completely screwed by this government. The anger is so intense it’s hard to even put into words.”

At the centre of his concerns is the sharp increase in rateable values due to take effect from April 2026. Hesketh says his hotel in Wrexham will see its rateable value rise from £87,000 to £171,000 — a jump he describes as unsustainable for a sector already operating on thin margins.

“I worked out recently that with regards to business rate changes that the rateable value of our hotel in Wrexham currently sits at £87,000. From April 2026 it will jump to £171,000. That’s basically double.”

He says the headline room rate bears little resemblance to the revenue left once mandatory deductions and rising costs are accounted for.

“So, let’s think this through, £80 per night, then you have to take away 20% for VAT, then there is 20% commission to Booking.com, another 10% has to go on Business Rates – so we are at less than £40 before we cover the further increased utilities bill, which are averaging circa 10%.”

That figure, he adds, comes before labour costs — the largest expense for most hospitality operators.

“Then, of course you need to factor wages for people like the cleaner of the bedroom, the maintenance man, the night porter, who is there for your health and safety, the receptionist to check you in, the management to keep the hotel top notch – that’s before we have anyone on standby to possibly offer you breakfast like a chef and a waitress.”

Beyond staffing, operators must absorb a host of additional costs that are rarely visible to customers.

“Of course, there are other items such as linen, toilet roll, toiletries, tea and coffee making facilities, any form of contribution to wear and tear/replacement of the goods in the room over time, perhaps a uniform etc.”

Even where a modest profit remains, Hesketh says further taxation erodes what little is left.

“If there was a £1 or so left at the end of all of this, the Government will come and take a further 25p for Corporation Tax at the very end for good measure.”

Hesketh is particularly critical of the methodology behind the upcoming revaluation, which is based on rental data from April 2024.

“These new rateable values kick in from 1st April 2026, based on a rental snapshot from April 2024. That alone is laughable. It pretends the world stands still and that a made-up rent reflects your ability to pay.”

He argues that the system fails to reflect the operational realities of hospitality businesses, which are highly dependent on people and vulnerable to economic shocks.

“It ignores reality, cashflow, payroll, debt, and the fact that hospitality is one of the most people-heavy, service-heavy, margin-tight industries out there.”

The frustration, he says, is heightened by political rhetoric that frames the measures as equitable.

“It feels like a number has been pulled out of nowhere just to take more money, and us entrepreneurs are paying for the privilege. And then someone, somewhere in the government, will tell you it’s ‘fair’, or that ‘everybody has to play their part’.”

Since Labour Party entered government, Hesketh says the pressure on independent operators has only intensified.

“Since Labour walked in, we have only had to pay more and more. You’re sitting there with a calculator trying to work out which part of your actual real life you’re supposed to sacrifice to keep this thing going.”

He warns that escalating costs are making hospitality businesses increasingly fragile.

“Every single part of running a hospitality business is now more expensive, more fragile and more stressful than it was a few years ago. But sure, let’s double the base you tax us on and call it ‘fair’ and ‘progressive’.”

In his view, recent decisions risk accelerating the decline of high streets and regional town centres.

“Labour haven’t walked into this and fixed it; they’ve walked into it and pressed the accelerator.”

“They talk about stability and responsibility while quietly making decisions that just squeeze anything that isn’t a giant corporation with endless pockets.”

Hesketh fears the consequences will extend far beyond individual businesses.

“The game is being rigged in real time, and people like us are the ones paying for it. We are being given a bad hand right now and everyone is undergoing a very hard time.”

“And if enough of us go under, it won’t just be a few failed businesses, it’ll be empty streets, dead towns and a government wondering where all that business rate money went when there’s nobody left to bleed.”