Many independent hotel owners could be in line for rebates on their business rates bills worth tens of thousands of pounds due to the impact of the recession, writes Don Baker of CVS.
Declining revenues brought about by the recession and an oversupply of bedrooms are leading to many successful business rates appeals for hotel owners. Reductions of up to £90,000 are being achieved in some areas.
With hotel vacancy rates remaining relatively high outside London, I predict that many more hoteliers could achieve successful business rate reductions on appeal.
A perfect storm is brewing for independent hotels as a result of declining guest numbers and increasing competition from budget chain hotels. Both have had a major impact on independent hotel revenues in many towns and the result is that many hotels are simply paying too much in business rates.
Hotel operators need to ensure the Valuation Office Agency has up-to-date turnover and hotel oversupply information to produce accurate rateable values.
Business rates for hotels are based on the annual level of trade, excluding VAT, that a hotel can be expected to achieve assuming it is run in an efficient way. Hotels that have experienced a decline in trade or changes in their local area between the date values were recorded for the 2010/11 business rates list and when the bills came into effect could be eligible for a reduction on their bills.
Business rates are a major cost for hoteliers. Appealing business rates is often the most effective way of ensuring that a hotel business is paying the right amount in rates and the fact that we are achieving up to six figure business rate reductions on appeals for many of our hotel clients shows how far the Valuation Office Agency's trade projections are from today's reality.
CVS has successfully negotiated business rate reductions of £90,000 for the Cedar Court Hotel in Huddersfield, £70,000 for the Gomersal Park Hotel in Cleckheaton and £40,000 for the Grosvenor Pulford Hotel in Wrexham.
Don Baker is national head of rating at CVS, in Manchester, Bristol and London.