A herring gull looks down on Llandudno promenade and its parade of popular hotels(Image: Andrew Forgrave/North Wales Live)
A prominent hotelier has voiced concerns that the hospitality sector is being “set up to fail” due to government policies. As business rates are predicted to skyrocket, Steven Hesket said Wales faced “empty streets and dead towns”.
The hotelier’s fears are shared by many in the industry as business rate changes loom, coupled with escalating energy and staffing expenses. Hotel owners have cautioned that staff layoffs may become inevitable.
Mr Hesketh co-runs Hotel Wrexham, which opened its doors in June 2024 after acquiring Holt Lodge Hotel. Shortly thereafter, he secured planning permission for a £1.3m apart-hotel in the city’s former registry office. He also owns a hotel in Chester.
He said hospitality businesses were being “completely screwed” by both Westminster and Cardiff. “The anger is so intense it’s hard to even put into words,” he stated, reports North Wales Live.
“I calculated recently that due to changes in business rates, from April 2026 the rateable value of our hotel in Wrexham will leap from £87,000 to £171,000. That’s essentially 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%.
“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 added: “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.”
Hospitality businesses in Llandudno have voiced similar worries, facing substantial hikes in business rates bills. Pubs, restaurants and cafés are equally impacted – with many anticipating difficulties in maintaining profitability as expenses continue to climb.
Aberconwy MS Janet Finch-Saunders said that the sector has been wrestling with steep rises in food and beverage costs, elevated utility bills and increases in the living wage. With business rates set to surge in April, she warned that firms were feeling “frustrated and let down”.
According to UK Hospitality Cymru, Wales faces the steepest business rates in the UK, stemming from rateable values climbing by 26%, which has added an additional £131m in expenses.
Advocating for lower business rates for smaller enterprises, Ms Finch-Saunders stated: “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 operates the Hospitality Hero platform, argued that the new rateable values were founded on flawed assumptions as they’re derived 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.”
Welsh Government position.
Since the pandemic, the Welsh Government has invested over £1bn in temporary rates relief for the hospitality, leisure and retail sectors. It already provides £250m annually in permanent business rates relief.
Whilst the new revaluations will result in some bills rising, other businesses will experience reductions.
Cardiff unveiled an additional £116m support package for businesses affected by revaluations last month. Where bills increase by more than £300, the rise will be staggered over two years.
For the first time since 2010, the multiplier will also be lowered for all ratepayers. However, the hospitality and leisure sector were excluded from these reforms.
Mark Drakeford, Cabinet Secretary for finance, stated that small and medium-sized retail shops will benefit from a new lower rate, reducing their bills by approximately £20m. He further stated: “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.”
