UKHospitality has published modelling projecting the closure of 2,076 hospitality businesses across Great Britain in 2026 — the equivalent of six venues shutting every day — if the government does not introduce a permanent, sector-specific solution to business rates before April's wave of cost increases arrives.
The forecast breaks down to 963 restaurants, 574 hotels and 540 pubs over the course of the year, or approximately 19 restaurants, 11 hotels and 10 pubs every week.
The numbers behind the warning
The immediate trigger is the end of the 40% Retail, Hospitality and Leisure (RHL) business rates discount, which expires on 31 March 2026. Its replacement — lower multipliers set 5p below the standard rate — removes the cap that previously limited exposure for larger sites, fundamentally shifting the burden onto mid-to-large operators who had relied on the relief to remain viable.
For hotels specifically, the change is severe. The average hotel faces a business rates increase of £28,900 in the coming financial year, with the cumulative impact rising to £205,200 over three years — a 115% increase against the current position. The average pub is looking at a 15% rise next year, an additional £1,400, rising to 76% over three years at an extra £12,900.
Those figures compound against National Living Wage increases already confirmed for April. The main rate rises from £12.21 to £12.71 — a 4.1% increase — while the rate for 18 to 20-year-olds rises to £10.85, an 8.5% jump that exceeds original government projections and reflects a deliberate acceleration towards a single adult rate. Across the sector, UKHospitality calculates the wage uplifts represent an additional £1.4 billion in annual cost.
Kate Nicholls: the sector bears the highest tax burden in the economy
Kate Nicholls, chief executive of UKHospitality, has been consistent in pressing the case that hospitality operates with uniquely thin margins and uniquely high tax exposure. The sector is the largest employer in private industry, contributing over £54 billion to the UK economy, but it carries labour cost ratios — typically 30–40% of revenue — that are unmatched across comparable industries.
National Insurance contribution increases that came into effect earlier this year added further pressure, reducing the point at which employers begin paying contributions while simultaneously raising the rate. Combined with the RHL discount removal, April 2026 represents the largest single increase in the cost base that many operators will have faced outside of the post-pandemic period.
What operators are watching
For those managing multi-site portfolios, the business rates change is particularly acute for estate strategies that assumed the RHL discount would be extended or made permanent. Operators who structured expansion or lease renewal decisions on the basis of continuing relief now face a materially different cost position.
Independent operators — with no group procurement, no management fee income and no ability to cross-subsidise loss-making sites — remain the most exposed. The 540 pub closures projected by UKHospitality's modelling would represent a continuation of a trend that has accelerated since 2022, and which shows no sign of reversing without direct government intervention.
The industry body is calling for a permanently lower multiplier for hospitality properties below a rateable value threshold, aligned with the existing small business rates relief structure but extended meaningfully up the size scale. Whether that case lands in time for April's bills remains to be seen.