Britain’s biggest hospitality groups are bracing for higher costs as changes to business rates come into force this spring.
Whitbread, the owner of Premier Inn, is the latest major firm to warn of a significant hit from the reforms.
Whitbread expects to take a financial blow of approximately £35million due to business rates alterations stemming from the autumn budget.
The £35million hit is lower than Whitbread’s original estimate, which had put the cost at between £40million and £50million following the autumn Budget, from the 2027 financial year.
However, the company has stressed that the reduction does little to soften the blow, warning that the changes remain damaging for hospitality and should be reconsidered by ministers.
The business rates overhaul, announced by Rachel Reeves, comes into force in April and will see many firms lose a 40 per cent discount, while higher property valuations outweigh any benefit from lower multipliers.
Whitbread says the changes will continue to add pressure to a sector already grappling with rising costs.
The trade body UK Hospitality has issued a stark warning that more than 2,000 hospitality businesses face closure this year without Government intervention on what it describes as staggering property tax increases.
According to the organisation's estimates, 2,076 venues across the sector could be forced to shut their doors in 2026 as a direct consequence of the April rises.
Whitbread says the changes will continue to add pressure to a sector already grappling with rising costs
| PAThe breakdown reveals that 574 hotels are at risk of closing, alongside 540 pubs and 293 restaurants.
This toll would equate to approximately six hospitality establishments ceasing operations every single day throughout the year.
Industry figures have been vocal in their criticism of the incoming changes, with the trade body adding its voice to growing demands for the government to extend any relief measures across the entire hospitality sector.
Ministers are anticipated to unveil a support package for pubs within days, representing a significant reversal of the budget plans announced on 26 November. However, UK Hospitality chairwoman Kate Nicholls has insisted that any assistance must not be limited to pubs alone.
Around 574 hotels are at risk of closing, alongside 540 pubs and 293 restaurants
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She argues that hotels and restaurants are confronting equally substantial rises in their tax burdens and deserve the same consideration from policymakers.
The trade body has been pressing for sector-wide relief rather than targeted support for one part of the industry, warning that without broader action, thousands of businesses beyond the pub trade will be left vulnerable to closure.
Despite the economic climate, Whitbread reported robust performance in its most recent trading update, with group sales climbing two per cent to £781million during the three months ending 27 November.
Growth was driven by Premier Inn operations in both the UK and Germany, with accommodation revenue per available room rising three per cent
The trade body has been pressing for sector-wide relief rather than targeted support for one part of the industr
The company now anticipates delivering cost efficiencies of between £75million and £80million this financial year, exceeding its earlier guidance of £65million to £70million.
These savings span labour, technology and procurement operations.
Chief executive Dominic Paul said: "We delivered a strong performance in the third quarter, with positive momentum across the business."
The firm continues its major restructuring programme launched in 2024, which resulted in approximately 1,500 job cuts and the reduction of around 200 branded restaurant sites to make way for additional hotel rooms.
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