Hotel management company RBH focuses on returns and reforms in the face of business rates revaluations and advises other hospitality businesses to do the same
Keeping calm and focusing on the job at hand while lobbying for change should be top of the agenda for hospitality businesses in the wake of increasing business rates, says David Hart, Chief Financial Officer of Redefine|BDL Hotels (RBH).
RBH is thought to be one of the UK’s leading independent hotel management companies, which oversees a portfolio of more than 50 properties – 13 of which are in Scotland. It’s facing business rate hikes averaging 29% – with increases for individual hotels of up to 142% – in the coming financial year.
But Hart says the business will be focusing on what it does best – transforming hotels and striving to increase returns for its owners to lessen the impact of increasing costs – while lobbying for change in the background.
He said: “The hotel owners we work with will be directly, and significantly, impacted by changing business rates – just one of many rising costs facing the hospitality industry.
“It’s not a cost that can be easily offset by directly-related price increases for the end customer, so we’re taking a pragmatic approach and continuing to focus on generating healthy returns for our owners by looking at how we can transform every part of their hotel’s business so that any increases won’t hit them as hard.
“All owners – particularly smaller independent properties – are going to feel property rate increases bite, mainly because of what we see as fundamental flaws in the system.
“The approach to revaluation is very much ‘one size fits all’ in a given region or industry, and doesn’t necessarily account for factors that are important for hospitality businesses, like presence of new hotels and the impact of third party booking agent commissions on net revenue.”
Lobbying for system reform is high on the RBH agenda but, with operating hotels being its area of expertise, it engages third party business rates experts to negotiate with valuation officers, and to make RBH’s views known to the people who matter – the policymakers.
Hart explained: “Our use of experts to negotiate the business rates position leaves us free to focus on what we do best, while letting our hotel owners benefit from the expertise of those firms.
“This approach has already paid immediate dividends for us with an initial group of hotels having significantly improved on their 40% increases that were originally communicated to a revised average increase of 26%. One hotel in particular had a draft increase of 33% which has been successfully negotiated down to only a 2% increase.”
And while politicians have sought to address the wide-ranging feelings of frustration, this doesn’t go anywhere near far enough, according to Hart.
He said: “The measures announced by the Scottish and UK Governments only offer temporary relief to select groups – or leave the final decision on who gets help to local authorities. While every little helps, it doesn’t address the core issue, which is the perception of the existing system for revaluing business rates as a non-transparent, blanket approach used to impose increasing, unexplained costs on all businesses no matter their circumstances.
“We’re keen to see fundamental reform, with a more bespoke approach taken by evaluators that really takes account of individual circumstances and which gives businesses certainty over their cost base in the longer term.
“In the meantime, we’ll be rolling up our sleeves and focusing on what we do best – transforming hotels and generating superior returns for our hotel owners.”
RBH’s east of Scotland property portfolio includes Courtyard by Marriott Edinburgh, Doubletree by Hilton Edinburgh City Centre, Holiday Inn Express Edinburgh City Centre, and Princes Street Suites.