Hotel operators have warned that measures announced in the Autumn Budget will add to already significant cost pressures, with the prospect of new visitor levies and higher wage rates overshadowing reductions in business taxes for smaller sites.
Business-rates specialists said some hotels could see liabilities climb sharply from April 2026. According to Savills director and head of national rating, David Parker, operators were facing “several pressures”, with business rates potentially rising by more than 250% for some properties. He said transitional relief would cap next year’s increase at 30% for the largest assets and limit an expected supplementary uplift for properties above £500k in rateable value to about 5.8%.
Smaller retail, hospitality and leisure (RHL) properties under that threshold will see a lower multiplier than non-RHL sites, though Parker noted this comes as current 40% relief ends.
Meanwhile, Starboard Hotels chair Paul Callingham described the levy as “a direct tax on hotels”. He warned that operators would have to absorb the cost because room rates are market-driven, adding that inconsistent charges across regions could be “hard to manage” and difficult for authorities to collect from short-let providers.
Callingham added: “This has not been thought through and we will probably see different rates all over the country which for a business like ours will be hard to manage.
“I suspect it will be impossible for the local authorities to collect this Levy from Holiday Let businesses, especially individual Air B&B landlords.”
Savills managing director for hotels, Carine Bonnejean, said permanently lower business-rates bills for smaller and mid-sized hotels from 2026 would provide some relief, but larger sites could face higher costs. She added that further increases in the National Living Wage and the minimum wage for 18 to 20-year-olds would squeeze margins, while weaker growth forecasts and frozen income-tax and National Insurance thresholds to 2030 could dampen demand.
Bonnejean said: “The effective tax burden on hotel stays has increased as local authorities in England now have the option to introduce an overnight visitor levy, similar to European city taxes, in addition to an unchanged VAT rate despite sector lobbying.”
Coastal operators also voiced concerns. Daish’s Holidays commercial director, Paul Harper, said the budget “delivers yet another blow” to a sector already burdened by high operating costs. He said a tourist tax would raise prices in a market with higher VAT than competitors and could “place additional pressure on businesses that are already struggling”, while the lack of a VAT cut on food and drink would continue to weigh on household budgets and domestic demand.
Hoteliers in Bristol meanwhile said the measures offered little reassurance ahead of winter trading. Bristol Hoteliers Association chair Adam Flint said the city had enjoyed a strong final quarter but the budget had “dampened the enthusiasm” among operators. He said higher-than-expected wage increases for under-21s would add to existing pressures, including rising food costs, higher insurance premiums and increased National Insurance contributions.
Flint added: “The chancellor did reveal that the government would permanently lower business tax rates for more than 750,000 retail, hospitality and leisure properties, to the lowest rate since 1991, which may offer some relief to some venues, but it’s not nearly enough.”
National groups said the sector continued to face significant strain. BWH Hotels GB chief executive Tim Rumney said the budget was a missed chance to support an industry that had lost 89,000 jobs in nine months. He said a visitor levy “risks undermining” operators at a time when costs are already high and could leave the UK less competitive than European countries with lower hospitality VAT rates.
Rumney added: “A ‘tourist tax’ might look like an easy way to raise revenue, but in reality it risks undermining the very hospitality and tourism businesses that keep our economy vibrant.”
According to Imperial London Hotels’ chief operating officer Neil Braude, the budget used the industry “as a cash cow” and would restrict the ability of larger operators to invest in local areas despite broader ambitions to support neighbourhood growth. Braude added that continued pressure on household incomes meant hotels, restaurants and bars would need to work harder to attract customers.
The industry is expected to analyse the full detail of the measures in the coming weeks, with operators warning that strategic planning around pricing, staffing and investment will remain essential as the sector heads into 2026.
