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Recession creates business rates windfall for independent hotels

By Luke Nicholls , 12-Jul-2012

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, according to business rates specialist CVS.

Declining revenues brought about by the double-dip recession and an oversupply of bedrooms are leading to many successful business rates appeals for hoteliers, with reductions of up to £90,000 being achieved in some areas.

Due to the way business rates for hotels are calculated – on the annual level of trade a hotel can be expected to earn – many independent hotels are achieving thousands of pounds worth of business rate reductions on appeal due to a drop off in earnings.

“A perfect storm is brewing for independent hotels as a result of declining guest numbers and increasing competition from budget chain hotels,” said Don Baker, national head of rating at CVS.

“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 (VOA) has up-to-date turnover and hotel oversupply information to produce accurate rateable values.”

Major cost for hotels

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.

Baker added: “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 VOA’s trade projections are from today’s reality.”

With a significant increase in business rates taking place in April this year, CVS has seen an increasing demand for its services.  Spanish restaurant chain La Tasca and bar, restaurant and private members club The Soho House Group, are just two recent examples of hospitality businesses that have enlisted CVS to carry out business rates appeals.

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.

For more information on business rates and to find out if you could be eligible to appeal, visit www.cvsuk.com

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