Representative ImageRising business rates are set to pile further pressure on the UK’s hospitality sector, with industry leaders warning of widespread closures unless urgent action is taken ahead of changes due in April.
New figures from the British Chambers of Commerce (BCC) show business rates anxiety has reached a record high, with more than a third of firms (34%) expressing concern in its Q4 2025 Quarterly Economic Survey. Hospitality businesses are the most worried, with nearly half (49%) citing business rates as a major concern — the highest level of unease recorded since the survey began tracking the issue in 2017.
The BCC has called on the Treasury to rethink its approach, warning that the proposed reforms risk leaving already-stretched sectors dangerously exposed. While limited protections for pubs have been welcomed, the organisation said many small hospitality operators remain at risk, while larger players such as airports and hotel chains are facing multi-million-pound hikes.
Transitional relief is essential
Kate Shoesmith, Director of Policy and Insights at the BCC, said the Chancellor had acknowledged the business rates system is “broken” in the Autumn Budget, but warned that the current proposals lack balance. She said an immediate uplift in transitional relief is essential to cushion the sharp increases in rateable values expected from April, before longer-term reform is delivered.
Business rates system risks 6 venue closures a day
The warning comes as fresh modelling from UKHospitality paints a stark picture for the sector. The trade body estimates that without a hospitality-wide solution to rising business rates, more than 2,000 venues could close in 2026 — the equivalent of six closures every day.
The analysis forecasts the loss of 963 restaurants, 574 hotels and 540 pubs next year alone. Under current plans, the average hotel is set to face a £28,900 increase in business rates in 2026, rising to £205,200 over three years — a 115% jump. Pubs are expected to see rates rise by 15% next year, followed by a 76% increase over three years.
Need to increase the business rates discount
UKHospitality is urging the Government to increase the business rates discount for hospitality properties from 5p to the maximum 20p permitted in law, arguing this is vital to preventing mass closures and supporting the high street.
Chair Kate Nicholls said soaring business rates would add to an already unsustainable cost burden for hospitality businesses, which are facing higher wages, national insurance contributions, energy costs and ongoing inflationary pressures.
She warned that neighbourhood restaurants, local pubs and regional hotels would be among the hardest hit, despite hospitality being one of the UK’s largest employers and a key driver of economic growth. Without urgent intervention, Nicholls said, rising costs will continue to outstrip revenues, undermining the Government’s ambitions to boost jobs and economic activity.
UKHospitality said its modelling is based on NIQ Hospitality Market Monitor data, alongside current closure rates and member survey responses on business failure risk.
