“The Welsh government need to realise that what they’re doing is damaging the industry.”
That’s according to Sam Regan, owner and managing director of the Lemon Tree – a hotel and restaurant in Wrexham.
The city has gained international attention in recent years as the home of the football club with the Hollywood star owners.
But despite the high-profile investment of Ryan Reynolds and Rob McElhenney, the hospitality industry here, and across Wales, is struggling amid a series of challenges.
“We’ve been in a little bit of a bubble because of the media attention brought by Wrexham football club. But it’s not the whole answer,” Mr Regan told Sky News.
‘Major implications’
Mr Regan, who is also chair of the regional tourism partnership, says international visitors are bringing “much higher spends” to Wrexham than a domestic market, but this may not be the case in the long-term.
The challenges facing the hospitality industry are not exclusive to Wales – they include rising food costs and higher utility bills.
But at an already difficult time for the sector, business rates relief for Welsh retail, hospitality and leisure businesses are being slashed.
In the last financial year, businesses were eligible for 75% off their liability, but this year that’s been reduced to 40%.
“The average business in Wrexham is going to be affected to the tune of about £8,000 by the decision not to give the 75% and keep the 35% back for other purposes in Wales,” Mr Regan added.
In England, the relief rate remains at 75%.
There is a concern from some that businesses will look to base themselves in England due to the difference in support.
“Anecdotally, I’ve heard evidence that a gym chain has been looking at Wrexham as an option and also Shrewsbury, which isn’t a million miles away, and they’ve opted for Shrewsbury ultimately because business rates relief is significantly different,” Mr Regan said.
“We’ve got businesses in Wrexham, where you could cross the road, literally cross the road from one café to another…one’s got 40% rate relief from 1 April, and the other’s got 75%.
“That’s got major implications on small businesses.”
‘Pips squeezed out’
The total amount the Welsh government is spending on business rates support for hospitality, retail and leisure businesses will go down this year.
In 2023-24, £140m was invested but this year it will invest only £78m.
Rhys and Charlotte Williams own the 66-bed Dunoon Hotel and two restaurants in Llandudno, Conwy county.
Mr Williams told Sky News the cut in business rates relief means he will have to pay over £20,000 more this year – an increase of around 66%
“£20,000 is a big number when you’re also still dealing with rising costs after the energy hikes last year, and the big uplift in costs across the board,” he said.
Mr Williams said it felt like the hospitality sector in Wales was “having the pips squeezed out” of it.
“If I was in England, as a business I’m going to be paying just over £13,500 next year,” he added.
“So suddenly hospitality in Wales is being put on the back foot against its immediate competitor, and life is tough enough already without having that thrown on you.”
He said the business saw a 350% increase in its energy bills last year and it would be a “long old slog” to gradually exit those contracts over the next six to 18 months.
“You get a very real sense, particularly up in the North, that the South is just another country that has its own set of priorities, political and economic or otherwise, from the North. And the North is just stranded,” he added.
‘Hard to continue’
Yan White is director of The Queer Emporium in central Cardiff.
He told Sky News he had recently been looking at the possibility of setting up a branch in Bristol.
“We know that if we go to Bristol and do a pop-up, we’re likely to make more money and even though we’re a non-profit, that is still something we have to think about,” he said.
“We’ve looked at opening a second store somewhere like Bristol potentially. But a big part of that reason is because we kind of would need it to keep us buoyant.”
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He said the Welsh government was “cranking up the handles” by cutting support and was making it “incredibly hard to continue operating”.
“It’s going to cost us a few extra thousand a year, which on our turnover as a non-profit, that is quite significant. That’s not a small amount,” he added.
“I do worry that what we’re basically seeing is a huge bubble that’s about to burst.”
‘Doing all we can’
A Welsh government spokesperson said they were aware of “the ongoing cost-of-living and cost-of-doing-business crises”.
“We are doing all we can, with the resources and powers available to us, to provide support in these difficult times..
“We provide a range of permanent non-domestic rates reliefs, worth £250m annually and fully funded by the Welsh government.
“This includes small business rates relief, which supports ratepayers for around 70,000 properties across Wales, of which over 50,000 receive full relief.
“We are also providing a fifth successive year of support for retail, leisure and hospitality businesses with their rates bills, at a cost of £78m.
“This builds on the almost £1bn of support provided in rates relief schemes to these sectors since 2020-21.”
The Welsh Conservatives say pubs and restaurants in the country are facing “real hardship” and have committed to maintaining business rates relief “so businesses can be properly supported”.
Plaid Cymru say the reduction in business rates relief was a “perfect storm” when coupled with other pressures and that the existing business rates system “simply does not work”.