Several pieces of news coming out of the United Kingdom and mainland Europe this week have caught the attention of the news-reading public, and they have ramifications for the hotel industry, some more than the others.
I will simply list the facts as I see them and a link for more reading.
Business rates support for pubs
Pubs are the backbone of British hospitality. The perfect pub — and many do still survive — is the epitome of British travel, for the ambiance, the locals, the warmth and the fare. But many pubs have suffered with the cost-of-living crisis seeing more people staying at home, rather than socializing. As a result, pubs have been closing at record numbers.
Now, the U.K. government has stepped in with legislation that states pubs will receive a 15% cut to new business rates bills from April. That will be followed by a two-year “real terms” freeze, and there has been promised a review in how pubs are valued vis-à-vis business rates.
UKHospitality is cautiously happy with the news. Its chair, Kate Nicholls, said, “this emergency announcement to provide additional funding is helpful to address an acute challenge facing pubs. The reality remains that we still have restaurants and hotels facing severe challenges from successive budgets. They need to see substantive solutions that genuinely reduce their costs.”
European Union-India trade pact
After decades in a trading interregnum, India and the European Union — which have a combined population of 1.9 billion — have signed a trade deal. That comes at a time when the global trading market is a confused one, with U.S. tariffs, Chinese pushback and backroom deals.
“The EU is India’s largest trading partner, accounting for €120 billion worth of trade in goods in 2024 or 11.5% of total Indian trade. India is the EU’s ninth-largest trading partner, accounting for 2.4% of the EU’s total trade in goods in 2024. Trade in services between the EU and India reached €59.7 billion in 2023, up from €30.4 billion in 2020,” the EU said in a statement.
This will boost business and hotel stays in both the EU and India.
Eduardo Bosch, CEO of French firm Louvre Hotels Group, told The Economic Times the agreement “will help the tourism industry for sure because there will be more and more corporations working and traveling on both sides. This means additional demand for hotels."
UK school holiday fines
In some European countries, notably Italy and France, the annual vacation from the workplace takes place in August. Hotel average daily rates invariably rise during this month in a pure demand-and-supply play. But in the U.K., the traditional vacation period matches that of the school summer holidays: six or seven weeks across July, August and September.
Still, though, there are many parents who take their children out of school to go on vacation to take advantage of deals or lower prices. The U.K. government does not like that, and in the 2024-2025 school year, it issued a record number of fines, according to the BBC. Officials issued 459,288 school holiday fines during the year, which is a 4% increase over the previous year.
Hotels, of course, accept bookings without the stipulation that guests might be fined, and the parents involved likely consider the fines — between £60 and £80 — are worth it.
The end of residential leaseholds?
This is news that could lead to U.K. homeowners having a little more disposable income in their pockets. Leasehold mortgage owners have long worried that they had no or little control over increases to their ground rent and that they would not be able to sell their properties.
Leasehold properties tend to be crowded cities or in multi-flat/apartment buildings, the latter comprising approximately 70% of leaseholds.
Published on Jan. 27, the draft Commonhold & Leasehold Reform Bill was a promise from the current government in its manifesto before the General Election in 2024. The bill will stipulate that commonhold is the default tenure and that there will be a cap on ground rent, controls in situations where longer leases are imposed and a ban on new long leaseholds on flats/apartments.
The leasehold system could be described as a medieval one. Legal firm Osborne Clarke, in a review of the draft bill, quoted Steve Reed, secretary of state for housing, communities and local government, as saying, “the existing long-leasehold system … [is] feudal in nature and [has] tainted the dream of home ownership for many. With around 5 million existing leasehold properties in England and Wales, the bill will have significant and far-reaching effects.”
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