The Thursltone Hotel has stood on the south Devon coast for more than a century.

In all that time, its custodians have welcomed holidaymakers from Britain and beyond – offering “endless sea views” and, more recently, a spa and access to a nearby golf course.

Rooms start from £225 a night but with a slew of tax rises coming this year, manager Tim Hassell will be left with little choice but to raise prices.

“The last two Budgets have added about £350,000 to our costs through National Insurance, business rates and other bits and pieces,” he says.

“That is a huge amount for us to bear, and our profits are not high enough to sustain that. We owe it to our shareholders and our employees to make a profit.”

Hotels are staring down the barrel of extraordinary tax rises from April, with business rates – the equivalent of council tax paid by commercial properties – set to more than double over the next three years, according to UK Hospitality, the industry trade body.

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It is just one of many burdens piled onto Britain’s coastal towns, which rely heavily on tourism to sustain local economies.

Restaurants and cafes face similar tax increases from April, and energy bills across the sector remain high.

Plus, holidaymakers are still weighed down by the increased cost of living, going out infrequently and spending less when they do. And many second homeowners are selling up as councils and Westminster target them.

Allen Simpson, of UK Hospitality, says: “Hospitality and tourism are the cornerstones of our coastal communities, and hotels in those areas are both significant drivers of the local economy and big employers.

“Business rates increases are yet another expensive blow for the sector, after it suffered enormous increases in employer NICs [National Insurance contributions] in April. Combined, it’s a perfect storm that threatens local jobs, business viability and our famous coastal hospitality and tourism.”

Telegraph analysis of government figures shows the biggest business rate rises have been in holiday hotspots such as west Devon, where average rateable values, which are used to determine a property’s tax bill, have risen by an average 66pc.

By contrast, these figures rose by no more than 14pc across London boroughs.

On Tuesday, 100 hotel bosses, including executives at chains such as Hilton, Butlin’s and Holiday Inn, wrote to Rachel Reeves demanding relief from ruinous taxes.

The hoteliers say: “These changes to business rates present the most significant challenge to accommodation providers in terms of their ongoing viability, and many will face tough decisions in terms of employment and their ability to invest.”

Hospitality businesses have been in uproar since December, when it emerged that the Valuation Office Agency had sharply increased its estimate of the value of their properties, triggering steep tax rises.

The furore forced the Chancellor to announce an emergency support package for pubs – hundreds of which had barred Labour MPs in anger.

Details of the support have not yet been announced, but Reeves has poured cold water on hopes that the wider hospitality sector – including restaurants and hotels – would be included.

“The situation the pubs face is different from other parts of the hospitality sector,” she told reporters.

For hoteliers like Hassell, the snub is indicative of a Government that doesn’t understand how rural tourist economies work.

He said: “None of them has ever run a business or a payroll, so they have no idea how businesses actually work.

“They only talk to big businesses with specialists, whereas those of us in small businesses do everything ourselves and deal with real people and real customers.”

The tax assault on coastal towns extends beyond hotels.

Labour has enthusiastically followed through with legislation, devised by Michael Gove, that allows councils to charge double council tax to second homeowners.

Many holiday homeowners have sold up rather than absorb the tax, tanking house prices and “putting a drag on the local economy, given many second homeowners employ local staff and spend in local shops”, says John Webber, of property firm Colliers.

Reeves also raised the stamp duty surcharge from 3pc to 5pc in her 2024 Budget, a move widely understood to benefit first-time buyers at the expense of second-homeowners and landlords.

For hospitality, the barrage of cost increases has been relentless.

In her November Budget, Reeves raised employers’ National Insurance contributions and minimum wage – both of which hit the sector hard.

“The only way to survive is to cut investment and cut the wage bill,” says Hassell.

“After the first statement, we shelved a £1.7m building project to develop a sports facility. We were planning to build padel courts, but after the second statement, we shelved that as well.”

Veryan Palmer, whose family has run the Headland Hotel in Newquay, Cornwall, since 1979, faces a £180,000 rise in payable business rates from April.

The hotel is currently going through the arduous process of challenging its previous valuations, and has so far received a £68,000 refund as a result.

“If we owed money to HMRC and delayed payment for 18 months, that would not be acceptable,” Palmer says.

“We are lucky enough to be able to afford someone to work on our rates for us, but the whole system feels completely out of touch with reality.”

The 125-year-old hotel has been a safe bet for local young people looking for their first job, and has offered placements to teenagers aged 14 and 15.

“We run events in schools to encourage young people into the workplace,” says Palmer. “The question is whether we can keep doing that.”

Andrew Hunter, of jobs website Adzuna, says: “Young workers aged 16 to 24 make up just 10pc of the UK workforce overall, yet they fill around half of roles in the hospitality sector.

“These jobs have long acted as a stepping stone into work, giving young people their first real experience and a foothold in the job market.”

Hospitality vacancies have fallen from a peak of around 92,480 in November 2021 to about 43,544 in the same month last year – a drop of roughly 53pc – according to jobs website Adzuna.

Steve Darling, the Liberal Democrat MP for Torbay, worries that the collapse will worsen the problem with Neets – young people not in education or training.

“Opportunities for young people have been significantly impacted as businesses cut their cloth accordingly,” he says. ]

“What the National Insurance changes have resulted in is people trimming around the edges and muddling through.

“Where they would previously have taken on a member of staff in the summer, they are now just hoping they can cope without.”

Government figures show the proportion of 16-year-olds and 17-year-olds in Devon and Cornwall in neither education nor training was 6.1pc and 6.7pc in 2025 – both higher than the national average of 5.6pc.

A slight comfort for those who have managed to secure a job is that pay has steadily risen since the pandemic, according to Adzuna, not least because of increases to the minimum wage.

But it is ultimately holidaymakers who foot the bill.

Average daily rates for hotels in Britain have surged by more than 30pc from £95 to £123 a night, according to the industry analyst CoStar.

In their letter to Ms Reeves, hoteliers warned that prices would continue to rise because of her policy choices.

Hassell worries that there is only “so much people will pay,” especially as people can choose to go abroad instead.

“Guests forget that the moment they pay for anything, the Government takes 20pc,” adds Palmer. “We have one of the highest VAT rates for hospitality in Europe.

“Most other countries appreciate the value hospitality brings in terms of revenues flowing into rural areas with limited employment opportunities, but our government seems to completely ignore that.”

Darling says businesses are in Devon are in “survival mode” as they brace for the coming onslaught of tax rises.

“I was walking down the street in Paignton when a local businessman told me he was worried that after April, his business would no longer be viable and that he would have to see whether there was any more cloth to be cut or whether he needed to throw in the towel.”

A government spokesman said: “We are working with the sector along with the Visitor Economy Advisory Council to demonstrate tourism’s role in driving local economies and to spread its benefits across all regions, including coastal and seaside areas like Cornwall and Devon.

“We’re backing hospitality businesses with a £4.3bn support package to limit bills rises, alongside capping corporation tax at 25pc, cutting red tape and taking action on the cost of living to boost high streets.”

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