A herring gull looks down on Llandudno promenade and its parade of popular hotels(Image: Andrew Forgrave/North Wales Live)
A leading hotelier claims the hospitality industry is being “set up to fail” by government policies. With business rates set to soar, Steven Hesketh detailed the extraordinary pressures facing his two properties in Wrexham. He fears the upshot will be “empty streets and dead towns”.
His concerns reflect wider industry alarm over dramatic rises in rateable values combined with rising energy and staffing costs. Hoteliers in Llandudno have warned of staff redundancies may become unavoidable.
As managing director of Chester-based Savvy Hotel Group, Mr Hesketh jointly operates Hotel Wrexham, which launched in June 2024 following the acquisition of Holt Lodge Hotel. Shortly afterwards, he received planning consent for a £1.3m apart-hotel in the city’s former registry office. He also has a hotel in Chester.
Outlining his concerns, he claimed hospitality businesses were being “completely screwed” by Westminster and Cardiff. “The anger is so intense it’s hard to even put into words,” he said.
“I worked out recently that with regards to business rate changes, from April 2026 the rateable value of our hotel in Wrexham it will jump from £87,000 to £171,000. That’s basically double.
“So, let’s think this through, £80 per night, then you have to take away 20% for VAT, then there is 20% commission to Booking.com. Another 10% has to go on business rates – so we are at less than £40 before we cover the increases in utilities bills, which are averaging circa 10%. Join the North Wales Live Whatsapp community now
“Then of course you need to factor wages for people like the cleaners, the maintenance man, the night porter, who is there for your health and safety, the receptionist to check you in, the management to keep the hotel top notch. That’s before we have anyone on standby to possibly offer you breakfast like a chef and a waitress.”
Mr Hesketh continued: “Of course, there are other items such as linen, toilet roll, toiletries, tea and coffee-making facilities. Then there’s wear and tear/replacement of the goods in the room over time, perhaps a uniform etc.
“If there was £1 or so left at the end of all of this, the government will come and take a further 25p for Corporation Tax for good measure.”
Similar concerns have been expressed by hospitality businesses in Llandudno facing significant increases in business rates bills. Pubs, restaurants and cafes are also affected – and many of them expect to struggle to remain profitable as costs keep rising.
Aberconwy MS Janet Finch-Saunders said the industry has grappled with sharp increases in food and drink prices, higher utility costs and rises in the living wage. With business rates due to shoot up in April, she said businesses were feeling “frustrated and let down”.
According to UK Hospitality Cymru, Wales has the UK’s highest business rates in the UK, the result of rateable values increasing by 26%, adding an extra £131m in costs.
Calling for reduced business rates for small firms, Ms Finch-Saunders said: “Llandudno has one of the highest concentrations of hotels in Wales and the sector employs a substantial number of local people.
“Industry leaders have made it clear that if costs continue to rise, staff redundancies may become unavoidable, placing further strain on public finances.
“Llandudno thrives off tourism, and if closures or redundancies occur, the impact on the local economy and tourism sector would be significant.”
Mr Hesketh, who also runs the Hospitality Hero platform, claimed the new rateable values were based on false premises as they’re drawn from rental snapshots from April 2024. “That is laughable,” he said. “It pretends the world stands still and that a made‑up rent reflects your ability to pay.
“It ignores reality, cashflow, payroll, debt, and the fact that hospitality is one of the most people‑heavy, service‑heavy, margin‑tight industries out there.
“It feels like a number has been pulled out of nowhere just to take more money, and us entrepreneurs are paying for the privilege.
“Every single part of running a hospitality business is now more expensive, more fragile and more stressful than it was a few years ago. Sign up for the North Wales Live newsletter sent twice daily to your inbox
“If enough of us go under, it won’t just be a few failed businesses, it’ll be empty streets, dead towns and a government wondering where all that business rate money went when there’s nobody left to bleed.”
Since the pandemic, the Welsh Government has spent more than £1bn on temporary rates relief for hospitality, leisure and retail sectors. Already it provides £250m each year in permanent business rates relief. It noted that while the new revaluations will cause some bills to rise, other businesses will see them fall.
Last month Cardiff announced an extra £116m of support for businesses affected by their revaluations. Where bills increases by more than £300, the rise will be phased in over two years. For the first time since 2010, the multiplier will also be reduced for all ratepayers. However the hospitality and leisure sector were excluded from these reforms.
Mark Drakeford, Cabinet Secretary for finance, said small and medium-sized retail shops will benefit from a new lower rate, cutting their bills by around £20m.
He added: “We know businesses have faced significant economic challenges in recent years. This support package will help them manage the transition to updated rates bills while we deliver on our commitment to a fairer rates system.
“By introducing more frequent revaluations and a lower rate for small shops, we’re making sure the business rates system reflects today’s economy and supports the businesses that are the backbone of our high streets and communities.”
