In just two years, the number of Airbnb bookings in London alone has sprung up by the equivalent of TEN Shards. Now, hotels are saying: OUR RATES ARE TOO STEEP!
LEADING hotel chains are preparing to launch a volley of business rate appeals over the meteoric rise of Airbnb, which they argue has had a huge impact on their business.
The appeals follow a major review of business rates, which has seen many hotels’ bills more than double – just as Airbnb has created a vast network of rooms and properties to rent that pay no business rates at all. The website’s bookings are said to be the equivalent of hundreds of new hotels springing up.
Companies can ask for a reduction in their business rates bill if they believe there has been a ‘material change’ in their circumstances. And rating specialists at property consultant Colliers International are advising hoteliers they have a strong case to argue that Airbnb and other hotel business ‘disruptors’ have done exactly that.
The problem is particularly acute in London. John Webber, head of rating at Colliers, told The Mail on Sunday: ‘We’re still in a buoyant market for hotels, and occupancy levels are up, due in part to the exchange rate. The problem will be when the music stops.
‘Hoteliers will then look round and notice that Airbnb has bookings for millions of nights and from a rating point of view that does make a difference.’
Airbnb, whose site allows people to rent out spare rooms to visitors for a night at a time, is growing rapidly. New research carried out by Colliers and hospitality institute Hotelschool The Hague found that nights booked in London with Airbnb more than doubled from 2 million in 2015 to 4.6million in 2016.
Airbnb’s share of overnight stays also more than doubled to 9 per cent, while the number of active properties listed so far in 2017 has risen by 80 per cent year-on-year.
Webber said: ‘If a hotel is built down the road from your hotel, that’s a material change and grounds for an appeal against your business rates. Hoteliers should look at how many Airbnb rooms are booked near them and, if appropriate, use that as grounds for appeal. ‘If you translate those 2.6million extra Airbnb nights plus the 55 per cent rise so far this year, it’s the equivalent of ten Shards, or several hundred new hotels across the UK. If that was happening on the ground you would notice it. The problem is it can slip under the radar and if your turnover is still going up you might not notice it straightaway.
‘We act for a number of hotel operators and there are plenty of appeals that we will be making over the coming weeks because of this.’
Ufi Ibrahim, head of the British Hospitality Industry, said she would ‘absolutely support’ hotels taking action, but feared delays, adding: ‘Waiting for the Valuation Office to process all these appeals – and the volume is going to be high – while hotels are seeing their margins eroded would be very worrying.
‘The rise in business rates is too high. The system needs to be fundamentally reformed and we need the Chancellor to act quickly, otherwise businesses are going to be squeezed post-Brexit.’
Like other businesses, hotels saw huge increases in their business rates from April 2017. The Dorchester in Mayfair is seeing rates rise by 131 per cent, while one hotel in Belgravia is facing a rise of 194 per cent. Several in Victoria are seeing rises of more than 150 per cent.
Ibrahim accused platforms such as Airbnb of operating in ‘Wild West-style’. She said: ‘Half the Airbnb room nights in London are offered by professional landlords who are not complying with the law, either by letting out multiple properties, or for more than 90 nights a year. And they are using the platform to circumvent planning regulations, health and safety regulations and tax, and particularly business rates.’
An Airbnb spokesman told The Mail on Sunday: ‘Hotels are making near record profits and appear to be doing all they can to avoid paying taxes. Airbnb is an economic lifeline for families, and hosts are not typically businesses or professionals. The average UK host on Airbnb shares their space for less than four nights a month to help boost their income, which is subject to personal taxes like income and council tax.’
The company added that Airbnb has attracted support from within the hotel industry – such as Taleb Rifa, secretary-general of the UN World Tourism Organisation, who recently said hotel chains need to stop complaining about companies such as Airbnb and instead embrace the opportunity.
Bookings in the boroughs of Westminster, Kensington & Chelsea, Hackney and Tower Hamlets, accounted for nearly half of all London Airbnb stays last year.
Webber said hotels in these areas should take particular note, and begin appeals against rate bills, as should hotels in cities such as Oxford and Bath that attract tourists and hence Airbnb operators.
‘Everyone quotes the financial advantage Amazon has over traditional retailers, by not paying the same 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 to get their rate bills under control.’