Business rates are quietly strangling hospitality growth and punishing success on Britain’s high streets

It’s a business rates system that no longer fits how hospitality actually works.

Venues like mine are not standing still, in fact in January we saw one of our best trading weeks to date, perhaps because immersive experiences like our racing simulators are a great antidote to the January blues, but success shouldn’t mean being insulated from a system that makes growth harder than it needs to be.

The UK hospitality sector is energetic and innovative. It brings life to local communities. It creates jobs, drives footfall and gives towns and cities like mine their character. Yet despite this, hospitality continues to operate under a cost structure that makes long-term growth harder than it needs to be.

Hospitality businesses already face some of the highest fixed costs of any industry. Energy prices remain volatile, food and drink costs have been disproportionately impacted by inflation, rents are high, and wages have risen as businesses compete to attract and retain good staff. Business rates add another unavoidable cost on top, and it is one that must be paid regardless of how the business is performing.

Unlike many other expenses, business rates are static. They don’t account for quieter periods, seasonal trade or changing consumer habits. Hospitality income often fluctuates across the year, but rates remain constant whether a venue is full on a Saturday night or operating at reduced capacity (or closed) during off-peak months. That mismatch puts unnecessary strain on even well-run businesses.

The business rates system is now under active discussion. From April 2026, the government plans to introduce permanently lower business rate multipliers for retail, hospitality and leisure venues, alongside a revaluation and revised transitional relief scheme. These proposals are a recognition that the current system needs to better reflect how hospitality actually operates. But the detail matters. The changes must go beyond headline relief and ensure that the system supports venues through seasonal trade patterns, encourages investment and allows businesses to grow with confidence.

When fixed costs rise, operators are left with limited options. Passing costs onto customers risks reduces footfall as fewer people can afford to go out. Reduced footfall then creates the ghost towns we have seen in many towns and cities, weakening local economies and ultimately reducing the very tax base business rates rely on.

There’s also an impact behind the scenes. Hospitality is a people-led industry, and high service standards depend on investment in recruitment, training and retention. Rising overheads restrict that investment, making it harder to build strong teams and consistently deliver the experiences customers expect.

What’s often overlooked is that hospitality businesses want to grow. They want to invest, expand, create more jobs and contribute more to their local economies. But high, inflexible business rates can quietly discourage that ambition. For young entrepreneurs like myself especially, it can feel like success is penalised rather than supported.

I’m not asking the government to remove business rates altogether. I’m calling for reform that better reflects seasonal trade, footfall and turnover. I want the business rates system to recognise the realities of hospitality, while still protecting public revenue. It should reward venues that bring life back to high streets and town centres.

Hospitality has shown extraordinary resilience over recent years. But resilience shouldn’t be mistaken for limitless capacity to absorb outdated policy. If we want vibrant communities, thriving nightlife and accessible places for people to come together, then business rates need to evolve. The sector has moved on and flexed; the system should too.

Felix Baggott is the Founder of Full Send Racing Lounge

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