How hotels are valued for business rates
Find out how the Valuation Office Agency (VOA) calculates rateable values for hotels.
Applies to England and Wales
Small independent hotels
The Valuation Office Agency (VOA) normally classes hotels as small if they have 20 or fewer bedrooms (50 in central London), do not have other facilities and are run as an individual business or as part of a small group
The VOA uses the rental comparison method to value small independent hotels. This involves reviewing how much small hotels were rented for on a set date. We group similar properties together to form valuation schemes. Find out more about the rental method.
The VOA uses ‘double bed units’ to compare and value small hotels as not every small hotel will be rented. A double room (including twin or king beds) is one double bed unit.
We collect a large amount of rental information from across the sector, looking at hotels’ location and facilities. We use this evidence to calculate a set value per double bed unit for every type of small hotel.
Example
If the rent of a hotel was £10,000 and it had 10 double bed units, the value per unit would be £1000. We can apply this set value per unit to similar hotels in similar locations to estimate their rent.
Large independent hotels and chain hotels
The VOA works out the rateable value of large hotels and chain hotels using fair maintainable trade (FMT). This is the annual level of trade your hotel might expect to achieve if operated in a reasonably efficient way. We apply a percentage to the fair maintainable trade to calculate the rateable value. We base FMT and the percentage on the:
- location of your hotel
- type of hotel
- services your hotel offers, such as food and drink, spa or conference facilities
- hotel’s expected profit and trading performance
2026 rateable values
A rateable value is an estimate of what it would cost to rent a property for a year, on a set date known as the Antecedent Valuation Date (AVD).
The most recent revaluation came into effect in England and Wales on 1 April 2023. It was based on the AVD 1 April 2021.
The next revaluation will come into effect in England and Wales on 1 April 2026. It will be based on the AVD 1 April 2024.
On the AVD 1 April 2021, hotels were affected by the COVID-19 pandemic. This meant most hotels were given much lower rateable values in the 2023 revaluation than they otherwise would have received. Increases in rateable values in the 2026 revaluation reflect the increase in hotels’ trade since 2021.
The VOA’s approach to valuing hotels for the 2026 revaluation has been agreed with leading agents representing ratepayers in the sector and trade body UK Hospitality.
Your rateable value is not the amount you have to pay. Local councils use rateable values to calculate business rates bills.