Autumn Budget 2026: Five key talking points for hospitality operators

Business rates support has provided some positive news for hospitality following the Autumn Budget, but higher employment costs and drinks duties mean operators still face difficult decisions as they plan for 2027.

For hotels, restaurants, cafés, caterers and bars, the announcements combine immediate financial considerations with longer-term changes to taxation, technology and local regulation.

Industry leaders have welcomed progress while calling for further action to help businesses invest, recruit and grow. Here are five key talking points.

1. Business rates relief offers greater certainty

From April 2027, qualifying hospitality properties in England will receive full Small Business Rates Relief up to a rateable value of £18,000, with tapered relief available up to £21,000. The government estimates that an additional 3,900 restaurants and 2,200 cafés will consequently pay no business rates.

Qualifying properties will also benefit from a real-terms freeze in 2027–28 and 2028–29, with bill increases capped at CPI inflation, subject to exceptions. This offers greater certainty, although it does not necessarily mean bills will remain unchanged in cash terms.

Protection will also continue for a further year for eligible businesses previously receiving support through the 2023 Supporting Small Business scheme.

Allen Simpson, Chief Executive of UKHospitality, welcomed the direction of travel.

“This is the first Budget in several years to deliver any positive news for hospitality at all, and it shows that forceful, sustained sectoral campaigning works,” he said.

However, he stressed that the announcements represented a first step, with the organisation continuing to campaign for a VAT cut and a reduction in the sector’s overall tax burden.

2. Higher wages put workforce investment under pressure

From 1 April 2027, the National Living Wage for workers aged 21 and over will increase by 3.9% to £13.21 an hour. Minimum hourly rates will also rise to £11.27 for 18 to 20-year-olds and £8.31 for under-18s and eligible apprentices.

The accommodation offset, relevant to employers providing accommodation to staff, will rise to £11.53 per day.

For labour-intensive businesses, these changes will increase payroll costs and may prompt wider reviews of pay structures, recruitment plans and staffing budgets.

Robert Richardson, Chief Executive of the Institute of Hospitality, highlighted the importance of protecting investment in people.

“When financial pressures increase, decisions about recruitment, training and development can become more difficult, but the people who lead our businesses and deliver exceptional hospitality remain our greatest asset, and supporting them must continue to be a priority,” he said.

“There is no point in burning the lifeboat to save the ship.”

For operators, the challenge will be to accommodate higher statutory pay while maintaining the skills, service and career development that support long-term performance.

3. Food and drink purchasing presents a mixed picture

Alcohol duty will increase from February 2027, while higher Soft Drinks Industry Levy rates take effect in April 2027. These changes could affect purchasing costs across alcoholic drinks, liable soft drinks and mixers, adding pressure to margins and menu pricing.

The impact will vary by product and supplier, making it important to understand changes across the drinks list rather than assume a uniform increase.

Food import tariff suspensions offer a potential counterbalance. Covering specified products from November 2026 to December 2028, they could reduce costs for businesses importing directly or purchasing through suppliers.

However, lower tariffs will not automatically translate into equivalent reductions in wholesale prices. Operators will need to discuss the implications with suppliers and assess where savings might be available.

The practical question is how these changes affect the profitability of individual dishes and drinks, alongside customers’ expectations around quality and value.

4. Accommodation and visitor spending face further changes

Plans to give strategic authorities in England powers to introduce overnight visitor levies will be particularly relevant to hotels and other accommodation providers. This is a framework for local decisions, rather than a single nationwide charge taking effect immediately.

Local leaders will be able to set out revenue investment plans by March 2028. Operators will need to follow developments in their area, including potential implications for room pricing, booking systems and administration.

Other travel measures could also influence the wider guest journey. An RPI increase in Air Passenger Duty from April 2028 could affect travel costs, while proposed VAT changes for larger private hire operators from January 2028 could affect transfer prices. The turnover threshold remains subject to consultation.

A review of the Tour Operators’ Margin Scheme may have future implications for accommodation and package businesses, although no final replacement rules have been announced.

Separately, hotels operating asylum accommodation contracts should note the £150 million allocation for additional large sites in 2027–28, supporting the government’s commitment to end asylum hotel use.

5. Technology and licensing changes require forward planning

Future tax requirements will make software capability an increasingly important consideration when choosing or upgrading hospitality systems.

A technical consultation on mandatory till software standards is planned for 2027, with implementation details still to be determined. Mandatory VAT e-invoicing is scheduled from April 2029. Operators should discuss readiness with their technology providers as the requirements develop.

Hotels and venues operating publicly accessible or workplace EV chargers also need to account for the clarification that electricity supplied through these charging points is subject to 20% VAT from 1 November 2026.

Meanwhile, proposed outdoor-space licensing trials could give councils scope to test arrangements that make outdoor trading easier for pubs, bars and restaurants. Any opportunities will depend on future powers and local trials.

Together, these measures underline the value of planning beyond the next financial year, particularly where investment decisions involve systems, facilities or additional trading space.

The challenges and opportunities shaping hospitality businesses will be explored at HRC, part of Food, Drink & Hospitality Week, returning to Excel London on 5–7 April 2027.