Tim Bird, owner of Cheshire Cat Pubs & Bars, said the way properties are classified can significantly impact rateable values, particularly where accommodation is involved.
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He explained that pubs with rooms are typically assessed based on overall turnover, including accommodation income, meaning more successful sites can face higher bills.
“If your bedrooms get better and better, like if your pub gets better and better, you pay the price,” he said.
Discrepancies
However, Bird highlighted discrepancies across his own estate, where different classifications have resulted in starkly different outcomes.
At the Fitzherbert Arms, accommodation located in a separate building is rated independently as a B&B due to having its own postcode, rather than being included within the pub’s overall valuation.
Meanwhile, at the Roebuck Inn, a shift in classification from pub to restaurant and B&B saw rates fall dramatically.
“The previous owners were paying £30,000 a year in rates, and we ended up paying around £10,000,” Bird said. “Yet turnover has increased significantly, which almost proves the system doesn’t work consistently.”
He added that pubs are often assessed differently to restaurants, which are typically valued on square footage rather than turnover.
Success is punished
“The more successful you are as a pub, the more you’re punished, whereas that’s not necessarily the case for restaurants,” he said.
The comments come as the Government introduces a 15% business rates relief for eligible pubs and live music venues in 2026 to 2027, though the scheme excludes hotels and many accommodation-led businesses.
Richard Lewis, CEO of RedCat Hospitality, said the changes highlight a mismatch between how pubs with rooms are classified and how they operate in practice.
“While many of our sites are community pubs first and foremost, the inclusion of a small number of letting rooms is increasingly seeing them treated, at least in part, like hotels for rating purposes,” he said.
“Accommodation income is intended to support the long-term viability of the pub, particularly in market towns and rural locations, but instead it is pulling rateable values higher and driving up fixed costs at a time when margins are already under pressure.
“Pubs with rooms are not hotels with bars attached, nor are they simple wet-led pubs. It is vital they are not left in a grey area where they face the worst aspects of both pub and hotel ratings models.
“What the sector needs now is clarity, consistency, and a rates system that genuinely reflects how hospitality businesses operate.
“Looking ahead, we would like to see Government deliver on its commitment to fundamental reform, alongside a fair and inclusive approach that supports the whole hospitality sector, encourages investment, and allows community pubs with rooms to remain viable for the long term.”
The focus on pubs with rooms has become a key strategic priority for some operators, with groups increasingly repositioning their estates around the model.
Bird called for greater consistency across the sector, warning the current approach creates a “disparate” system where similar businesses are treated very differently.
