Hospitality News

If you run a hotel, guesthouse, B&B, hostel or holiday let in England, there’s a proposal quietly moving through government that could directly hit your bookings, your revenue, and your staff. It’s being called a “visitor levy”, but hospitality groups have taken to coining it a ‘Holiday Tax’.

What’s Actually Been Proposed?

The government is exploring giving regional mayors the power to add a local tax on overnight stays. The money raised would go towards local transport and infrastructure. The rate would be set locally and participation would be optional for mayors, but if your region’s mayor decides to opt in, you’d have no choice but to charge it.

The Numbers

Oxford Economics, commissioned by UKHospitality, has modelled what this could actually mean for the sector.

In the worst-case scenario, a 5% levy on accommodation could wipe £1.8 billion off tourism spending by 2030 and put 33,000 jobs at risk across the industry. Even a flat £2 per person per night charge could cost 16,000 jobs and reduce tourism spending by £846 million. And here’s the kicker: the Treasury itself would likely end up £688 million worse off in overall tax receipts, because lower economic activity means lower revenues across the board.

Why This Hits Harder Than It Looks

We’re operating in an environment where guests are already watching every penny. Staycations surged after Covid, but that loyalty isn’t unconditional. If a weekend break in a UK destination suddenly costs noticeably more than an equivalent trip abroad, people will start doing the maths. And the UK already charges 20% VAT on hospitality, one of the highest rates in Europe. Piling a visitor levy on top only widens that gap with our competitors. As Allen Simpson of UKHospitality put it, this would “hike costs for Brits, make staycations more expensive and decimate tourism.” That’s not hyperbole, it’s what the modelling shows.

The ripple effects matter too. It’s not just accommodation providers who suffer when visitor numbers fall. Restaurants, attractions, local retailers, transport operators, and entire regional economies, particularly those with few alternative industries, take a hit.

What You Can Do Right Now

The government consultation on this has just closed, but the fight isn’t over. The final policy position hasn’t been confirmed yet, and industry voices still have an opportunity to shape the outcome.

Here’s what we’d urge you to do:

• Stay connected with your trade association. UKHospitality is leading the charge on this. If you’re not already engaged, now’s the time.
• Talk to your local MP. This is ultimately a political decision. The more operators who make their concerns heard directly, the better.
• Document your situation. Real stories from real businesses: jobs supported, investment made, community contribution, carry weight in policy debates.

The Bigger Picture

Nobody wants to see the communities we operate in underinvested. Better transport links and local infrastructure benefit our guests and our businesses too. But a visitor levy isn’t the right mechanism if it ends up costing more in lost economic activity than it ever raises.

The UK Government is proposing to allow local mayors or leaders to impose a ‘tourist tax’ in their respective cities, in order to raise revenue for local services. This levy is already in place in several cities across the UK such as Edinburgh. They’ll also be given the power to decide the rate proportionally to their area, instead of the Government imposing a flat, nationwide rate. The consultation period for this proposal ends this Wednesday, the 18th of February.

Over 200 hospitality leaders have advocated for this proposal to be scrapped, arguing that it will deter holiday-goers from staying in Britain, especially deterring UK residents from taking domestic holidays. It’s feared that a decline in tourism due to rising visitor tax could harm communities that rely on tourism for their economy. They are backed and supported by UKHospitality, who state that “It could cost the public up to £518 million in additional tax when they travel in the UK and having knock-on impacts for the wider hospitality sector.”

This rise in costs for consumers will come on top of trickle-down effects from many other policies shaping hospitality in the UK. Customers can already expect to pay more for alcohol levies, rising food prices and one of the highest rates of VAT on hospitality in Europe. With more and more UK customers cutting back on dining out and going for drinks, there are fears that this will be another nail in the coffin for many hospitality businesses who may see a sharp decline in footfall once a tourist tax is implemented. After all, this will not only affect hotels and b&bs: nearby bars and restaurants that see a lot of tourists will also see a fall in customers who decide to holiday elsewhere.

Consultations on this will end this Wednesday at 11:59pm, so if you would like to have your say, see Gov.UK’s contact form here.

Almost 1 in 3 UK residents took part in dry January this year – a tally of 17.5 million (Alcohol Change UK). While this is a healthy step for the general public, it’s not so healthy for the UK hospitality industry during one of the toughest months of the year financially. With one pub in the UK closing permanently every day, dry January is an even tougher month for British pubs. This decline in sales adds to rising costs across the board, from energy bills and business rates to supplier price increases and staffing shortages. For many independent pubs operating on tight margins, January can mean the difference between survival and closure.

Yet while Dry January presents a short-term challenge, it also signals a long-term shift in consumer behaviour that the hospitality industry cannot ignore. Participation has grown steadily over the past decade, reflecting broader trends toward moderation, health consciousness, and mindful spending. Younger consumers in particular are drinking less frequently than previous generations, with low- and no-alcohol options now a fast-growing segment of the drinks market.

For pubs willing to adapt, this shift presents opportunity as well as risk. Alcohol-free beers, spirits and mocktails are no longer niche substitutes, they are premium products that customers actively seek out. Expanding alcohol-free menus, hosting alcohol-free tasting events, offering experience-led evenings (quiz nights, live music, food-pairing menus), and promoting inclusive social spaces can help offset seasonal dips in alcohol sales.

Diversification beyond drinks is also becoming essential. Food-led offerings, brunch services, coffee trade during daytime hours, and community events can stabilise revenue streams during quieter months. According to UKHospitality, venues that broaden their offer and focus on experience are better positioned to weather market volatility.

At a policy level, industry bodies continue to call for reform of business rates, energy support, and fairer taxation to prevent further closures (British Beer & Pub Association, 2024). With the hospitality sector contributing billions to the UK economy and employing over three million people, its resilience matters.

Dry January is unlikely to disappear. In fact, participation is expected to remain strong as consumers continue to reassess their relationship with alcohol. For the hospitality industry, the path forward lies not in resisting this cultural shift, but in evolving alongside it, creating spaces that serve both drinkers and non-drinkers alike. The British pub has long been a cornerstone of community life. Protecting its future will require innovation, flexibility, and meaningful support, particularly during the quietest month of the year.

From 1 February 2026, alcohol duty in the UK was increased in line with Retail Prices Index (RPI) inflation, about 3.66 %, as confirmed in last year’s Autumn Budget. While the tax is paid by producers and wholesalers, industry leaders warn this rise is likely to be passed on to consumers through higher shelf and bar prices.

How Much Prices Are Likely to Move

According to the latest figures, a bottle of gin may see ~38p extra tax added. A bottle of Scotch whisky may see ~39p extra duty. A 14.5 % red wine may pay ~14p more in duty. The cost of a pint in pubs could see an effective increase of around 2p per pint just from duty.

These figures are duty costs, not full retail price rises, but hospitality operators are already warning that duty hikes will continue to feed through into what customers pay.

Why This Matters for Your Business

Hospitality operators have been dealing with rising costs across the board, from wages and energy to supplier prices and business rates. And duty increases come on top of all of that. Industry bodies like the British Beer & Pub Association and Wine & Spirit Trade Association have warned that these cost pressures are forcing producers and pubs to raise prices just to maintain margins.

This means menu prices will likely rise, especially for wine & spirits where duty makes up a larger share of product cost. Customer value perception could change, especially if drinks creep above certain psychological price points. There’s a real risk that overall drink sales decline if footfall slows because customers perceive the pub or bar as “too expensive.”

What You Can Do

Here are practical strategies to manage this transition:

1. Review your pricing strategy

• Consider value bundle offers (e.g., wine with food pairings at a value price).

2. Communicate with your customers

• Be transparent about price changes: customers often appreciate honesty about rising supplier and duty costs affecting hospitality.

3. Boost draught & local options

• Draught beer still benefits from lower duty relief compared to packaged products, helping protect margins.

• Local craft beers and ciders can differentiate your offering while supporting local suppliers.

4. Engage with industry bodies

• Join trade organisations like UKHospitality, WSTA, or BBPA to stay on top of policy developments, lobbying efforts and support initiatives.

5. Train your team

• Educate staff on upselling techniques and confident drinks recommendations to maintain per-head spend.

Alcohol duty rises are not just another tax increase. They affect what you buy, what you sell, and how your customers react. With duty now indexed to inflation, this could be a recurring dynamic rather than a one-off.

Being proactive, through smart pricing, clear communication, and sales strategies that reflect your customers’ value expectations can help protect your margins and customer loyalty in a challenging environment.

We’re now one week into 2026, which means the budget changes for 2026 have started to kick in. For hospitality, November’s budget provided a lot of disappointment, with costs set to multiply throughout the year. Here are the changes you need to be aware of now that 2026 is under way.

Higher Living Wage

From April of this year, the NLW (National Living Wage) will increase to £12.71 an hour for workers aged 21 and over. For staff aged 18-20, the NLW will increase to £10.85/hr, and for those under 18 (and apprentices) it will rise to £8/hr.

This will significantly add to payroll costs, with UKHospitality estimating that the increase will ad £1.4bn in extra annual costs for the sector, and projecting that this will lead to businesses either raising prices or cutting staff to reduce costs.

Business Rates

From April 1, 2026, Reeves has announced that the temporary Retail, Hospitality, and Leisure (RHL) business rates relief will be replaced by new, permanently lower RHL multipliers for eligible properties in England with a rateable value (RV) below £500,000. The goal is for this to be paid for by higher multipliers for larger businesses, and those with an RV above £500,000.

This has received severe backlash recently, with operators of large pub and restaurant chains arguing that it will cut into their margins and pile on to existing business costs.

Other Cost Pressures

Despite hope, the VAT rate for the hospitality industry has not been reduced and will remain at 20% – towering over the EU average of 9%.

Tax thresholds will also remain frozen for another 5 years, pushing more workers into higher tax brackets. This will affect costs for both employees and employers.

Tourist tax is also looming over the heads of hospitality operators, with UK mayors being given the powers to decide on whether or not to implement additional tax/rates for overnight stays in hotels, hostels and b&bs.

As the UK hospitality sector heads into 2026, operators face a year shaped by financial decisions, fresh compliance burdens and evolving labour law reforms. After a turbulent few years marked by rising costs and recruitment challenges, 2026 could be a defining year in terms of survival, adaptation and transformation.

The 2025/2026 Budget and Its Impact on Hospitality

The UK Government’s recent Autumn Budget has delivered a mixed bag of challenges and limited relief:

Business rates reform:

From April 2026, the temporary Retail, Hospitality and Leisure (RHL) relief will be replaced by a permanent tiered business rates system, offering lower multipliers for smaller venues but potentially higher bills for larger properties, especially those with rateable values above £500,000. This will benefit many independent pubs, restaurants and hotels, but larger sites may see costs rise.

Higher wages and employment costs:

The National Living Wage for workers aged 21+ rises to £12.71/hour from April 2026, with even larger increases for younger age bands. These changes will add pressure to labour budgets, particularly given hospitality’s heavy reliance on part-time and young staff.

The cumulative effect of rising labour costs, changing business rates and tax burdens is already linked to job cuts and closures across the sector. Some operators and trade bodies blame these fiscal shifts for stagnating employment growth within hospitality and even venue closures.

Employment Rights Bill

One of the most significant shifts impacting hospitality employers in 2026 is the Employment Rights Bill. This legislative package is being introduced in phases and represents a massive overhaul of employment law, with significant implications for staffing, scheduling and dispute risk.

Key elements include:

Enhanced day-one rights (from April 2026)

Employees will gain statutory rights such as paternity leave, bereavement leave and a stronger safety net from their first day on the job.

A new Fair Work Agency

This body will enforce workplace rights and oversee compliance, an added compliance layer for employers.

Ban on exploitative zero-hours practices

Hospitality’s traditional reliance on flexible, zero-hours contracts will be upended. Employers will need to offer guaranteed hours based on actual work patterns, ensure adequate notice of shifts, and compensate last-minute cancellations.

Unfair dismissal rights adjusted

Initial drafts proposed full day-one unfair dismissal protection, but industry feedback led to a compromise: workers will qualify for unfair dismissal claims after six months rather than two years. This reduces exposure to tribunal action while still boosting employee security.

Workforce Outlook: Retention in the Spotlight

Labour shortages and high turnover are already critical issues for hospitality. With wage pressures, employment protections and enhanced rights, businesses must rethink recruitment, retention and workforce planning:

• Employers will need to balance the cost of higher wages and NICs with the need to stay competitive and attractive as employers.

• Flexible working patterns, once a staple of hospitality scheduling, may need redesigning, with less reliance on unpredictable shifts and zero-hours flexibility.

• Enhanced rights could stabilise staffing in the long run, reducing churn and improving morale, but in the short term, compliance costs and managerial workload will rise.

Adapting and Thriving in a New Era

The next 12–18 months will be a crucial period for UK hospitality, where resilience and strategic foresight will separate the winners from the squeezed. Budgets and regulatory frameworks are tightening around the sector, but opportunities remain, especially for those who plan early, embrace change and invest in people.

2026 isn’t just about surviving rising costs, it’s about reimagining work, reshaping operations and positioning hospitality for a sustainable future in the UK economy.

Tourist Tax is set to be introduced in cities across the country, under plans announced by the Government this year. The fee will apply to overnight stays, meaning hotels and other accommodation businesses will be hit the hardest by this change as customers face rising costs for their stays.

How will it be introduced?

This will not be a nationwide blanket policy; instead, Rachel Reeves has decided to leave the decision with mayors throughout the UK. London Mayor Sir Sadiq Khan and Greater Manchester’s Andy Burnham have been vocal about their support for the measure, however, the hospitality industry in the UK remain opposed. UKHospitality have projected that a 5% tourist tax would cost £518 million in additional tax for members of the UK public who take domestic holidays, with 89 million overnight trips having been taken by Brits in England in 2024.

How much will the tax be?

There has been no set cost allocated for the tax yet. This will also depend on the region/city. Edinburgh’s is set to be 5% of the cost of accomodation, whereas in Wales tourists face an add-on fee of £1.30/night. London currently has no fixed fee in mind, however, estimates suggest that a tourist tax in London could raise up to £240m a year.

When will it be introduced?

Realistically, these measures will not kick in for a while. There is a consultation with businesses and communities that lasts until February. The English Devolution and Community Empowerment Bill, which will give mayors the power to impose these taxes, will then be put through parliament. We likely will not see the full effect of these taxes until 2027.

Where does the money go?

The goal with this tax is for the money to be reinvested back into the community and local projects. One such example given by Gov.uk is to have tourist tax imposed in Liverpool repurposed to help prepare the city for the upcoming UEFA Euro 2028, which will be a big driver of the Liverpool economy.

In her recent UK budget, Rachel Reeves confirmed a business rates relief scheme for RHL (retail, hospitality and leisure) businesses. Temporary reliefs are being offered in 2026, while the Government prepare a permanent system to come into effect in 2027.

Under the temporary relief scheme, if your property qualifies and is occupied for the financial year 2025/26 ( between 1 April 2025 and 31 March 2026), you get a 40% discount on your business-rates bill. There will be a cash cap limit of £110,000 per business. This scheme is worth over £1.5 billion in an effort to aid high street businesses amid rising costs.

The later, more permanent system will see “permanently lower tax rates for over 750,000 retail, hospitality and leisure properties”, paid for with higher rates on the UK’s biggest businesses.

Brewers across the country have been making their opposition to these changes known: the independent brewers say that once the revaluations are taken into account and the transitional relief unwinds, pubs will typically pay 76% more in business rates by 2029 when large online tech firms would pay only 16% more. (The Guardian)

UKHospitality has presented figures and stats on how these new business rates may affect hospitality businesses in the coming years: In 2027/28, an average pub’s rates will be £4,500 higher than today, and in 2028/29 £7,000 higher. In total, over the three years, an average pub will pay an extra £12,900. A hotel will be paying an extra £28,900 in rates next year. In 2027/28, it will be £65,000 higher than today and in 2028/29 £111,300 higher. In total, over three years, an average hotel’s rates bill will increase by £205,200. By 2028/29, an average pub’s business rates will have increased by 76% and an average hotel’s by 115%.

Calculation and rate examples for the coming year can be found here.

Rachel Reeves has announced her budget today, making some big promises to reduce borrowing and kerb inflation without a return to austerity measures. Her goal is to rebuild the UK economy and lower the cost of living.

Here’s the key points from the budget for hospitality owners:

Minimum Wage

From April 2026, minimum wage for over 21s will rise to £12.71/hr. For workers aged 18-20, minimum wage will rise by 85p to £10.85, and for under-18s and apprentices it will rise by 55p an hour to £8.

UKHospitality has warned that this increase will be reflected in prices, with the costs being passed onto customers.The changes are projected to cost the industry an extra £1.4b.

Extension of Tax Threshold Freeze

Reeves has today announced that the freeze on tax thresholds, which was introduced by the previous government, will be extended for an additional three years. This means that until 2031, tax bands will stay the same even as wages rise. Reeves says that she understands this will push many workers into a higher tax bracket, but says she is asking for ‘everyone to contribute’.

As it stands, workers have a personal allowance of £12,750 that’s not subject to tax. Anyone earning below £50,270 is subject to 20% income tax, with a higher rate of 40% for anything above this.

VAT Rate

The current hospitality VAT rate of 20% will remain in place, with no reduction. This rate towers above the current European average of 12.8% for hospitality. UKHospitality have long called for a reduction in VAT to help businesses keep up with rising costs, however Reeves has decided to keep the rate as it stands.

NIC rates will also remain untouched, with NIC for employers currently standing at 15%. A reduction in NIC rates has also been requeested by UKHospitality, but to no avail.

Business Rates

In her budget, the chancellor reconfirmed plans to introduce permanently lower tax rates for retail, hospitality and leisure properties worth less than £500,000. This will be paid for by a higher multiplier on properties worth over £500,000.

The upcoming budget this Wednesday is an event anticipated (and often dreaded) by employers and workers across the nation. In particular, the hospitality sector. After years of thin margins, escalating costs, and post-pandemic recovery pressures, this Budget could either reset the playing field or bring further financial problems.

One of the biggest talking points for hospitality this year is business rates. According to government plans, from 2026-27, retail, hospitality, and leisure (RHL) properties with a rateable value (RV) below £500,000 will benefit from permanently lower tax multipliers. This would mean lower business rates for hospitality employers across the country. For many small to medium hospitality businesses , such as local pubs, cafés, or restaurants, this promises some stability. However, the relief is not universal: larger premises (RV of £500,000 and above) will face a higher multiplier, potentially increasing their business rates.

In a more positive note for pubs and brewers, the Chancellor has committed to a duty cut on qualifying draught products, reducing duty by about 1p per average-strength pint. While this won’t solve all cost pressures, it does signal that the government recognises the cultural and community importance of pubs, and is willing to ease some of the tax burden for those on the front line.

Meanwhile, the sector isn’t just sitting back and watching, it’s pushing hard. UKHospitality, the trade body for hospitality businesses across the country, has rallied a coalition of hundreds of operators (hotels, pubs, restaurants, visitor attractions) calling for easier business rates, NIC reform, and even VAT cuts. The scale of job losses is worrying: the sector claims more than 80,000 jobs have been lost, and many businesses are pessimistic about growth without significant tax relief.

Only Wednesday will tell what 2026 will have in store financially for hospitality operators; for now, we’re hoping with bated breath for some long-awaited good news.