The 2026 revaluation is reshaping businesses across the UK, but few sectors are feeling the impact more sharply than hospitality.
For hotels in particular, the increases are significant.
According to Adam Brooke, Rating Director at Dunlop Heywood, hotels, guesthouses and self-catering units have seen average rateable value increases of 76% compared to their 2023 Rating List values, with some properties experiencing increases of more than 250%. By contrast, the average increase across all property sectors sits closer to 19%.
That gap highlights the scale of pressure facing operators across the sector.
Why Has the Hotel Sector Been Hit So Hard?
The answer lies largely in timing.
The previous 2023 Rating List was based on the valuation date of 1 April 2021, a period still heavily impacted by Covid-19 restrictions and suppressed trading conditions. By comparison, the 2026 Rating List is based on a later valuation date, reflecting a much stronger trading environment for many hotel operators.
Because hotels are primarily valued using trading performance, the sector’s recovery has directly influenced rateable values.
As Brooke explains:
“The economic context between the 2021 valuation date and then 2024/2025 date is generally much improved for hotels in terms of turnover and with valuations based on trade; rateable values have increased accordingly.”
For operators, however, strong trading figures do automatically translate into greater financial flexibility.
The Pressure Isn’t Just Coming from Valuations
Alongside increases in rateable values, many operators are also facing changes to reliefs and how liabilities are calculated.
Over recent years, the retail, hospitality and leisure sector benefitted for a series of relief schemes introduced during and after the pandemic. These ranged from 100% Covid relief through to the more recent discount schemes available during the 2025/26 rate year.
Now, that support is beginning to reduce.
At the same time, the introduction of multiple business rates Multipliers means liabilities are becoming more varied across the sector. While some operators may benefit from lower multiplier rates, others could face significantly higher overall liabilities due to the scale of increases in their rateable values.
This creates a difficult environment for businesses already balancing rising staff costs, National Insurance increases and wider operational pressures.
A Valuation Method Under Scrutiny
The methodology used to value hotels has remained broadly unchanged between the 2023 and 2026 Rating Lists. Hotels continue to be assessed primarily through Fair Maintainable Trade (FMT), a trading-based approach designed to value large volumes of hospitality properties efficiently.
However, Brooke believes that approach does not always capture the full picture.
“There are alternate methods of valuation that provides a much deeper analysis of hotel’s performance on a more individual basis, a method that when employed can be often at odds with the values currently applied.”
This is particularly important in a sector where no two properties operate in the exact same way.
Even hotels in similar locations can experience very different trading conditions, operating models and commercial pressures, all of which can influence whether a valuation accurately reflects reality.
Are Some Hotels More Exposed Than Others?
While increases are being felt across the sector, larger properties and those in high-value areas such as London are often more exposed, particularly where higher multipliers also apply.
Yet, Brooke is clear that the impact is not always predictable.
“With hotels being valued on their specific trade; every valuation is individual to that property and as such; there can be wide discrepancies between hotels even in similar locations.”
That variation is one of the reasons many operators are now taking a closer look at their assessments.
The Biggest Risk? Doing Nothing
For Brooke, the greatest danger is not necessarily the increase itself, but how businesses respond to it.
“The biggest risk for a hotel operator is to simply accept their 2026 Rating List valuation.”
While transitional relief measures may soften the immediate impact for some operators, liability increases are expected to phase in over several years. Combined with rising operator costs, this leave little room for unnecessary payments.
As a result, reviewing assessments and understanding how liabilities have been calculated is becoming increasingly important across the sector.
Looking Ahead
The 2026 revaluation marks a significant shift for hospitality businesses.
For some operators, it will confirm that their assessments accurately reflect current trading conditions. For others, it may raise questions around methodology, fairness and whether their liability truly reflects the reality of the business.
What is clear is that the hotel sector is entering a more challenging business rates environment, one where assumptions carry greater financial risk than ever before.
If you would like to discuss how the 2026 revaluation may impact on your hotel portfolio, please get in touch with Dunlop Heywood’s Retail, Hospitality and Leisure team.
