Six hospitality firms a day could close without rates help, warns trade group

More than 2,000 pubs, restaurants and hotels could shut their doors this year unless the Government makes sector-wide changes to “staggering” incoming business rate increases, UK Hospitality has warned.

The trade body has joined the chorus of calls from industry figures for relief set to be announced for pubs to be extended across the sector.

It laid bare the toll that April 1 rises to property taxes will mean for hospitality companies, estimating that 2,076 firms could close in 2026 as a result, with 293 restaurants, 574 hotels and 540 pubs at risk of being forced to shut down.

This is equivalent to six hospitality venues closing every day, it said.

The Government is expected to announce a package of changes within days to help pubs amid outcry over the impact of rate hikes on the sector, marking a major U-turn on its November 26 budget plans.

But UK Hospitality chairwoman Kate Nicholls said this needs to be extended to hotels and restaurants, which are also facing significant hikes.

The group calculates the average hotel will see its rates increase by £28,900 in 2026 and by £205,200 in total over the next three years – an increase of 115%.

This compares with a 15%, or £1,400, rise for pubs in 2026, and a 76% jump over the next three years, which will mean an increase of £12,900.

Ms Nicholls said: “Staggering increases to business rates will affect the entire hospitality sector and without a hospitality-wide solution, we will see significant business closures.

“Thousands of venues, particularly neighbourhood restaurants and local hotels, will be forced to close for good as a result of the significant rates rises they’re facing.

“This is yet another blow to a hospitality sector that bears the highest tax burden in the economy, and has already been disproportionately burdened by increases to National Insurance Contributions, wages, energy and other inputs.”

The group is urging the Government to increase the business rates discount for all hospitality properties from 5p to 20p, which would be the maximum allowed under current law.

“Hospitality is one of the nation’s biggest employers and has an incredible potential to grow and create jobs, but the money coming in the front door is simply not enough to offset the rocketing costs of doing business,” Ms Nicholls said.

The rise in rates is due to a combination of properties being revalued and the withdrawal of Covid-era discounts which was announced by Chancellor Rachel Reeves in November.

Ministers had put in place a £4.3 billion fund to help pubs with the transition to higher rates, but it is understood that Ms Reeves will soon announce additional support, including further business rates relief and measures to cut licensing red tape.