Budget 2025 for UK Hotels and Travel Businesses | Antravia UK Analysis

Budget 2025: What the Confirmed Measures Mean for UK Hotels and Travel Businesses

The UK Budget 2025 was published today and the official documents set out the government’s fiscal position for the coming year. For travel, hospitality and tourism the most relevant content relates to the cost environment facing businesses, the continued programme of full expensing for capital investment and the government’s wider economic priorities. Although this Budget does not introduce new sector-specific tourism taxes or hospitality-specific VAT changes, the measures confirmed today still influence how hotels, travel agents and tour operators should plan for 2026.

This summary focuses only on the confirmed statements in the Budget 2025 document published on gov.uk.

The Economic Environment for 2025–26

The Budget sets the overall fiscal direction. The Office for Budget Responsibility forecasts that inflation is expected to return to target in 2026. Real GDP is forecast to grow modestly across the Budget period, with the labour market tightening further and higher public sector wage pressures. These economic conditions matter for hotels and travel businesses because wage inflation, energy costs and financing costs remain key drivers of operating expenditure.

The Budget also confirms the government’s commitment to improving public infrastructure, regional growth and transport connectivity. While these are long-term initiatives, they shape demand for domestic travel and support visitor flows into cities and regional areas.

Full Expensing and Capital Investment

The Budget confirms the continuation of full expensing for qualifying capital expenditure on plant and machinery. For hotels and hospitality operators this is one of the most relevant measures in the document. Qualifying investments in equipment, technology and fit-outs continue to receive a full up-front deduction against taxable profits. This applies to new plant and machinery investments that meet the criteria set out in the Capital Allowances regime.

Hotels planning refurbishments, kitchen upgrades, laundry equipment or technology investments should revisit their capital plans and ensure that all qualifying expenditure is correctly captured in the tax computation. For tour operators and travel companies investing in IT, automation or reservation systems, the same rules apply where expenditure falls within eligible categories.

Property, Regeneration and Local Development

Although the Budget does not make changes to hospitality business rates within the main document, it does emphasise regional regeneration and local growth funding. The government commits to supporting local authorities through targeted investment in infrastructure, culture and commercial redevelopment.

For hotels and tourism businesses operating in regeneration areas, this can influence medium-term demand patterns, property valuations and local authority priorities. Operators should continue to monitor regional announcements linked to Budget funding allocations, as some areas may receive targeted support that affects footfall, occupancy or domestic tourism demand.

Labour Market and Staffing Costs

The Budget sets out updated OBR projections for wage growth, employment levels and inflation. While no hospitality-specific wage measures are included in the Budget text, operators should take note of the broader outlook. Staffing remains one of the largest costs in the sector. Any changes to wage expectations or employment conditions arising from wider government policy will need to be integrated into 2026 forecasts.

Hotels, restaurants and travel businesses should revisit their labour planning, including overtime assumptions, seasonal staffing, and cost allocation in line with the economic projections included in the Budget.

Transport, Infrastructure and Visitor Demand

The Budget continues the government’s transport investment programme, including rail and regional mobility improvements. For travel agents and tour operators these commitments can support long-term demand for domestic leisure travel. Improved transport access also influences hotel demand, particularly in cities undergoing transport upgrades.

Although the measures are long term, businesses should continue to track regional transport investment announcements, as they can shift demand patterns and booking behaviour.

What Travel and Hospitality Businesses Should Do Now

The Budget document published today is high level, but it provides several financial signals that matter for the sector. Hotels, tour operators and travel agents should take the following steps:
1. Review capital plans and ensure qualifying plant and machinery expenditure is aligned with full expensing rules.
2. Update 2026 financial forecasts for staffing costs using the labour market projections outlined by the OBR.
3. Reassess energy, financing and cost inflation assumptions in line with the Budget’s macroeconomic outlook.
4. Track regional development funding and regeneration announcements that may influence demand.
5. Review tax computations and ensure capital allowances are applied correctly for all qualifying expenditure.

Final Thoughts

This Budget is not a tourism-specific statement, but it confirms several national measures that will influence the operating environment for hotels and travel companies. The continued commitment to full expensing, combined with the broader economic outlook for inflation, wages and regional investment, should be incorporated into 2026 planning and updated working capital forecasts.

Antravia UK will publish additional detail once the Finance Bill is released and further sector guidance becomes available.

If you would like a short compliance review or want to discuss the financial impact of these reforms, contact us through Antravia.co.uk.

Disclaimer:
Content published by Antravia is provided for informational purposes only and reflects research, industry analysis, and our professional perspective. It does not constitute legal, tax, or accounting advice. Regulations vary by jurisdiction, and individual circumstances differ. Readers should seek advice from a qualified professional before making decisions that could affect their business.