Colliers International has urged hotel operators to appeal against an “out of date” business rates regime that could hit profits and jobs, arguing that disruptors such as Airbnb have an “unfair advantage” by not paying rates.
John Webber, head of rating at Colliers, said that the rise in Airbnb lettings should be seen as a material change to the hotel industry, and that the Valuation Office Agency, which undertakes business rates appeals, should take that into consideration.
Nights booked in London on Airbnb rose by 130% in 2016, reaching 4.6m, with the market share of overnight visitors doubling to 9%. The number of properties listed in 2017 increased by 80%, year on year.
Meanwhile, some hotel operators have seen significant business rates rises following the April 2017 revaluation, with the rateable value of hotels in parts of London increasing by as much as 194%.
Webber said: “This is just not a level playing field. Not only is Airbnb attacking hotels’ market share by offering cheaper room rates, but it is able to do this through the unfair advantage of not paying business rates.
“We would argue that the advance of Airbnb rooms let in close proximity is a ‘material change’ and hotel operators should appeal their rateable value and hence their rates bill, before they take a financial turn for the worse, which would affect both profits and jobs in the trade.”
Airbnb bookings in the boroughs of Westminster, Tower Hamlets, Kensington, Chelsea and Hackney accounted for nearly 50% of all Airbnb stays last year, which means hotels in those areas are most likely to be affected.
Colliers argued that the additional availability of Airbnb rooms is the equivalent of several hundred new hotels being built across the UK. If they had been hotels in the traditional sense, the VOA would accept that there had been a “material change of circumstance”, the company said, and so it should do the same with Airbnb’s growing presence.
Webber said, “This is yet another example of how the current business rate regime is out of date and needs root-and-branch reform. Everyone quotes the financial advantage Amazon has over traditional retailers by not paying business rates, but the hotel industry is similarly affected.
“Hoteliers need to fight back and point out ‘the material change’ created by operators such as Airbnb, and get their rating bills under control.”
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