The United Kingdom government has launched a consultation process to limit homeowners’ ability to use their properties as short-term lets, a move that could dent the fortunes of Airbnb and other alternative-accommodations options.
Hoteliers say change needs to happen to create a fairer business landscape among the hospitality and travel industry.
Less rooms supply would also benefit hoteliers, although the U.K. government said the main reason it is looking at the issue is to increase the supply of homes for residential purposes and those looking to buy homes.
Hoteliers added their concerns might not be considered as the government sees the sector as a cash cow.
The consultation announcement, which pertains only to England, not to Scotland, Wales and Northern Ireland, said the issue is most critical in “coastal towns, national parks and some cities. … While short-term lets can support tourism and the local economy in such areas, it is important that this is balanced with meeting the needs of the local community.”
The government launched the first part of the consultation process in June 2022. Nigel Huddleston, the government’s minister of state, business and trade, said the U.K. had “seen huge growth in the range of holiday accommodation available over the last few years. … This review will help us work out the options to look at so we can protect our much-loved communities and thriving holiday industry.”
Responses to the last consultation need to be received by June 7.
Paul Milsom, managing director of Dedham, Essex-based Milsom Hotels & Restaurants, which has five hotels, said an overhaul of business rates is fundamental to providing fairness.
He said this tax is the paramount difference between legitimate accommodations businesses such as hotels and other providers, adding there is a definite difference between the traditional holiday-let market and firms such as Airbnb.
“Hospitality is the first field governments seem to target,” he said. “Business rates is the most loaded issue, essentially a stealth tax for the last 25 years. I have been in this business a long time, and when I started business rates were fine, something you gave little thought of, but now I would say these rates now are almost prohibitive,” he said.
Kate Nicholls, CEO of the U.K.’s principal hotel membership association, UKHospitality, said “the previous consultation was regarding whether the government should proceed with a registration scheme, and this consultation follows the government decision to go ahead and is concerning what the scheme should look like, so this shows there is clear progress towards the implementation of a scheme.”
Milsom said some sectors do not pay their share, such as online retail, which has, he said, resulted in High Street shop closures.
He said the main difference is that hotels pay business rates on turnover, not square footage, as is the case for shops and stand-alone restaurants.
Nicholls said she has long asked that short-term lets be held to the same legal standards as hotels and that new laws must be mandatory, not just an unenforceable code without any real need to alter practices.
“An opt-in scheme will simply provide a loophole that will allow short-term lets to continue to fall well below the high standards that have been set by hotels for decades,” she said, adding short-term lets often do not have the necessary health, safety and fire checks and insurance coverage.
“The government has got this wrong in my view. We are being taxed on success. We already pay value-added and corporation taxes. Imagine if banks were charged in this way,” Milsom said. “The thing is the government is massively invested in tourism, as for it, it is a great way of raising taxes.”
Milsom Hotels & Restaurants’ 14-room The Pier in Harwich, with a celebrated restaurant, would benefit from additional tourism, which might be provided by Airbnb and the like, Milsom added.
“Having Airbnb [in Harwich] would not be a bad thing, but in business you want a level playing field. Concerns such as noise, light, pollution, these are things generally not be overseen by absent homeowners, while hotels have to operate within a community,” he said.
The government’s consultation paper does mention discussion in Parliament has brought forward concern that short-term letting arrangements that exist now have seen many examples of a “hollowing out of communities, with the viability of local shops, schools and other local services impacted by the lack of a permanent population and properties being left vacant over winter.”
Official notes from the Department of Culture, Media & Sport, which includes hotels and tourism are included, state “one plausible estimate for the total number of short-term and holiday lettings in England in 2022 is 257,000.”
Nicholls added UKHospitality and hoteliers in general have “long been arguing that a registration scheme for short-term lets is essential to ensure parity across accommodation in the U.K.”
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