The man behind one of the region's best-known hotel brands describes his battle against the 'dark art' of business rates
PUBLISHED: 17:58 30 October 2018
Paul Milsom, the managing director of one of Suffolk’s most well known hotel and restaurant brands, Milsom Hotels, has lashed out at the way how business rates are charged to hospitality businesses, claiming the system is now “at breaking point.” He says it is “massively damaging” his business as he prepares to fight the rate assessment for one of his hotels, the Pier in Harwich, at a tribunal hearing.
Mr Milsom, whose family business also operates Maison Talbooth, Le Talbooth and Milsoms in Dedham, as well as Kesgrave Hall in Ipswich, explains that he felt “physically sick” upon seeing a 55% increase in his rates in 2017.
“In my over 30 years running this business, its the single hardest hit we have taken overnight,” he explained.
Mr Milsom is fighting the ratings listing for the period 2010-17 over a rateable value of £100,000 for the Pier, as it was reclassified from a hotel to a public house.
“Pubs have a different way of rating to hotels, which led us to such a ridiculously high rate. But the fact is the Pier operates in exactly the same way Milsoms does, which was rated as a hotel.”
After investing £1.5m in making the Pier “fit for purpose”, Mr Milsom was then hit with a double-whammy as the Pier’s rate valuation was hiked again, to £160,000 in 2017.
“We’re going to lose money or break even, when we should be making a profit,” he explained. “And when you have invested in the town as we have - we have been there for 40 years - I just feel absolutely shattered.”
Mr Milsom’s appeal against the Pier’s 2010-17 rating had been scheduled to go to tribunal in August but was cancelled two days beforehand, and has now been reset for January.
“The problem is the lack of transparency in the ratings sector - its a dark art,” he said. “It’s people sitting in centres on computers who are making these calls, and they have never been anywhere near my business.”
This week, the Chancellor announced a cut to the rates bills of retailers with a rateable value of £51,000 or less on their property by a third.
But Mr Milsom claims that “tweaking the system at the edges” isn’t going to help.
“The budget was great for small businesses, but it’s the medium sized businesses that are hurting the most. There is no help for hotels and restaurants like ours.”
Mr Milsom claims that the Pier’s nearest competitor in Harwich is the Tower Hotel, which is of a similar size. “Their rateable value is £48,000, which means they will get a one third reduction in their rates bill, and ours is £160,000 - it’s just unfair for business. It costs us £7,000 each month just to open our doors.”
“We may win our appeals when we get to it, but in the process it’s massively damaging to business.”
Mr Milsom has written to not just his local MP, Bernard Jenkins, but a swathe of other politicians to push his cause.
“We look after a lot of MPs at Le Talbooth- over the years we’ve had Boris Johnson, lots of heavyweight politicians, I have written to all of them, including Philip Hammond - there’s a picture here of me standing next to him.
“But how are the government going to solve the rates problem when they can’t solve Brexit?”
Mr Milsom claims that a “perfect storm” is brewing in the hospitality section, created not just because of rates but higher wage bills and Brexit.
“We are in a real mess, with the additional problem of what happens when we leave the EU in terms of recruiting staff.”
The rateable value of historic houses is greater, which means that Le Talbooth, which is in a building dating back to Tudor times, has a rateable value of £255,000, up from £155,000 in 2017.
“The rateable value at Le Talbooth is more than twice what the Colchester united stadium is, as theirs is £120,000. That’s just bonkers.
“We are fortunate that we are just about able to keep our heads above water and pay it because we have a very strong business over many years. But if we weren’t like that, we’d just go under and that is what’s happening up and down the country.”
Mr Milsom claims that most people aren’t aware that hospitality businesses are valued on their turnover and not on their footprint, as is the case with high street retailers. “You can have two buildings with the same footprint next door to each other and one could have a rateable value of double the other,” he explained.
“The problem is you pay business rates irrespective of whether you are making a profit or not. That is the reason why a lot of people just close down their businesses - its easier to just pack up. A lot of the chains are closing down because its not worth carrying on anymore.”
But there is a cloud in the silver lining of the business rates issue for Mr Milsom. “The good thing is that with rates as high as they are, we’re not making money, so at least we’re not paying corporation tax!
“But at the end of the day, we have got to make some money to invest in our business. Otherwise your business just goes backwards, so we are in a difficult situation.”