LET’S be very clear. Businesses in the local hospitality sector are often the focal point of our cities, towns and villages. They tie the high street together; they are the central meeting places of many rural communities; the toast of the advertising campaigns of our tourist bodies; often referenced in speeches by our politicians when overseas; and on top of that, contributes £1.2billion a year to the economy.
But at the turn of the year the sector was served up a body blow on rates.
The Rates Reval and subsequent Draft List of Values in the Non-Domestic Rates revaluation by the Land and Property Services showed an expectedly sharp hike in rates for many businesses in the sector and put them in a precarious position.
The way business rates are calculated for the hospitality sector are completely out of kilter with other businesses and are a significant financial burden on top of ever-increasing costs that are squeezing margins and threatening to put many out of business.
The reality of all this is that some premises have seen their valuations increase by £100,000 or more, with one bar seeing its valuation increase from £28,000 to £251,000 - a nine-fold increase. Around 60 pubs have seen their NAV double or more as a result of the revaluation.
So we must ask: on what planet is this a sustainable way to calculate non-domestic rates in a sector that contributes so much annually to the economy?
The challenge by Hospitality Ulster to fix the antiquated system is due to the fact that the rating system is based on a ‘receipts and expenditure model’ to obtain a fictional rentable value, which is calculated from turnover - unlike other non-domestic rates calculations, which are based on actual rental value.
We continue to pay the highest business rates in the UK and are getting very little in terms of support.
We believe each of our members should contribute fairly to the non-domestic rating system, but when these costs are unfair or excessive, it can have a very real impact on the ability of a business to continue as a going concern, leading to wider economic consequences.
Next week we will meet with the Department of Finance to raise the sector’s grave concerns about the methodology and the expected hike in rates. We will press the case with the Minister to make the changes necessary before it’s too late.
We need to have a serious and urgent look at how a remedy can be brought forward in Northern Ireland as we enter a critical phase that could see some in the hospitality sector simply collapse under the strain of rising costs.
No longer can the hospitality sector be taken for granted. The irony is that hard work and investment is the very thing that could put many out of business. The Executive and Assembly has it within its gift to sort this - and we call on them to do it now.
:: Colin Neill is chief executive of Hospitality Ulster
