Hotels stump up for new business rate bills

Some of London’s most iconic hotels are facing renewed pressure from rising property taxes, according to business rate experts who fear that the sector could be hit by the latest round of bills.

Real estate services firm Colliers found that 93 London hotels have been charged with a combined total rates bill of £12.2m this year, marking more than two-and-a-half times the sum in 2016/17.

The hotel which saw the highest rise in its rates bill is the Four Seasons near Tower Hill station, which has seen its levy jump from £176,000 in 2016/17 to just over £570,250 in 2019/20.

Read more: The burden of business rates falls unfairly on the West End

Meanwhile, The Marriot in Kensington has seen its business rate bill rise from £414,500 in 2016/7 to over £1m this year.

"Everyone is talking about how high business rates rises are impacting on retailers and are helping to kill the high street. But other sectors are also impacted," said John Webber, head of business rates at Colliers International.

Read more: Tesco boss accuses business rates system of 'killing' retailers

Webber added: "These figures show that the hotel industry, particularly in London, is seeing stiff hikes and combined with rises in theatres and concert venues, does pose questions about the government’s commitment to our London tourist scene. We need a widespread reform across all sectors of the market."

Marc Finney, head of hotels and resorts consulting at Colliers, said: "The indirect tax burden on hotels is now becoming a major issue. About twenty years ago a hotel could expect to pay between 0.5 per cent -1.0 per cent of revenues on property taxes (business rates). This is now closer to 5.0-6.0 per cent of revenues. With profit conversion rates in hotels running at about 30-35 per cent at EBITDA level this makes property taxes equivalent to in excess of 15 per cent and is fast approaching the same levels as corporation tax."