Business energy for hotels and B&Bs
Business energy for hotels and B&Bs
Hotels and B&Bs use energy around the clock for heating, hot water, lighting, laundry and kitchens, plus pools and spas where you have them. Government survey data shows guest washing facilities in hotels drive most hot water use across hospitality. Choose a contract that suits 24-hour demand, and check whether any part of the site, such as your own home or self-catering units, counts as domestic for VAT.
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How much energy do hotels and B&Bs use?
| Benchmark | Value | Source |
|---|---|---|
| Typical electricity use per m² (CIBSE TM46 hotel or boarding house benchmark) | 105 kWh/m²/year | GOV.UK |
| Typical heating fuel use per m², usually gas (CIBSE TM46 hotel or boarding house benchmark) | 330 kWh/m²/year | GOV.UK |
| Median total energy use per m², all hospitality premises (BEES 2014-15) | 387 kWh/m²/year | GOV.UK |
Benchmarks describe typical buildings. Your own use depends on floor area, opening hours, equipment and how efficient your building is.
What do hotels and B&Bs pay per kWh?
There are no official prices by business type, but the government publishes what businesses pay by size of energy use. In Q2 2026, the smallest UK business electricity users (up to 20,000 kWh a year) paid an average of 38.36p per kWh, and those using 20,000 to 499,999 kWh paid 28.59p. The smallest gas users paid 9.31p per kWh. These government averages include standing charges and the Climate Change Levy, but not VAT. Your bill shows a unit rate plus a daily standing charge, so it won't match these all-in figures directly. See business electricity prices and business gas prices for every size band.
Choosing an energy contract for hotels and B&Bs
- Hotels run 24 hours, so more of your use falls overnight than in most businesses. Ask for your half-hourly or monthly data and check whether a multi-rate tariff actually beats a single rate for your pattern.
- Seasonal hotels and B&Bs see big swings between summer and winter. A fixed price gives budget certainty through the peaks, but check whether the contract has any terms about using much more or less than forecast.
- If you have holiday cottages or self-catering units on site, check how they are metered. HMRC treats self-catering holiday accommodation as domestic use, unlike hotel rooms.
- Groups with several hotels can line up renewals and compare sites together, but review each site's usage and meter type first.
- Buying a hotel or B&B? Ofgem says you are responsible for energy used before your new contract starts, and you may be on a deemed contract with variable rates until you agree one.
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VAT and Climate Change Levy for hotels and B&Bs
HMRC Notice 701/19 lists hotels, inns and similar establishments as not qualifying for domestic use, so energy for guest rooms is charged at the 20% standard VAT rate and Climate Change Levy applies. Self-catering holiday accommodation does count as domestic use. If you live on site, your own living space is domestic: where it accounts for 60% or more of a supply, the whole supply gets the reduced VAT rate and is excluded from the main rates of CCL, which can matter for small B&Bs. Your supplier will need a certificate giving the exact percentage.
VAT on business energy · Climate Change Levy explained
How hotels and B&Bs use energy
Most hotels use gas for heating and hot water and electricity for lighting, kitchens and equipment; the CIBSE TM46 hotel benchmarks are 105 kWh/m² of electricity and 330 kWh/m² of heating fuel a year.
Bedrooms, corridors and public areas are heated for most of the day and night. The CIBSE TM46 hotel benchmark assumes about three times as much heating fuel as electricity per square metre. GOV.UK
Guest showers and baths, kitchens and housekeeping. The Building Energy Efficiency Survey found hotels' washing facilities were the major driver of hot water consumption across the hospitality sector. GOV.UK
Receptions, corridors, bedrooms and external lighting for car parks and signage. Corridor and stair lighting often runs all night for safety. Carbon Trust
Breakfast service, restaurants and room service. Catering was the largest single use of electricity across hospitality premises in the Building Energy Efficiency Survey. GOV.UK
Heated pools, saunas and gyms can dramatically increase energy use. The Carbon Trust notes that in a large hotel the pool alone can account for a significant amount of total energy costs. Carbon Trust
Occupancy is the big swing factor: a full hotel uses more hot water and catering energy, but heating and lighting empty floors and corridors is where waste hides. A pool, spa, on-site laundry or busy restaurant pushes consumption well above the benchmark for a rooms-only hotel.
Ways hotels and B&Bs can cut energy use
The Carbon Trust suggests letting corridors, lounges and stairwells fall to 16°C between midnight and 5am, when most guests are in their rooms. Carbon Trust
The Carbon Trust puts a comfortable sleeping temperature at 18 to 21°C. Modern controls can lower temperatures at night while letting guests adjust within limits. Carbon Trust
Key-card or occupancy-linked controls turn lighting, heating and ventilation down when a room is empty. The Carbon Trust says many such systems pay back within 1 to 3 years. Carbon Trust
HSE says stored hot water should be at least 60°C to control Legionella, so don't turn it down below that. Heating it well beyond 60°C wastes energy and raises the scald risk. GOV.UK
Separate time and temperature zones let you turn heating down or off on unoccupied floors, which matters most in quiet months. Carbon Trust
Covering a pool when it is closed cuts water heating, pool hall ventilation and top-up water. The Carbon Trust puts typical payback at 18 months to three years. Carbon Trust
FAQs
Do hotels pay 20% VAT on energy?
Yes, for the hotel itself. HMRC excludes hotels, inns and similar establishments from domestic use, so the standard 20% rate and Climate Change Levy apply to energy used for guests.
Can a B&B get the reduced VAT rate?
Not on the guest side, but the owner's own living space is domestic use. If your home and the guest rooms share a supply, you can declare the domestic percentage on a certificate; at 60% or more, the whole supply gets the reduced rate.
Do self-catering cottages count as domestic?
Yes. HMRC Notice 701/19 lists self-catering holiday accommodation as domestic use, so those supplies can qualify for the reduced VAT rate, unlike hotel rooms.
How much energy does a hotel use per square metre?
The CIBSE TM46 benchmark for a hotel or boarding house is 105 kWh of electricity and 330 kWh of heating fuel per square metre a year. Pools, spas and large restaurants push that up.
How can a hotel cut its pool running costs?
Start with a pool cover whenever the pool is closed. The Carbon Trust also advises keeping pool hall air about 1°C above the water temperature to limit evaporation, and not heating the water above what comfort requires.
Sources
- CIBSE TM46:2008 Energy Benchmarks, Table 1 (reproduced by Vale of Glamorgan Council)
- BEIS (now DESNZ), Building Energy Efficiency Survey 2014-15: Overarching Report
- Carbon Trust, Hospitality: saving energy without compromising comfort (CTV058 v3, 2018)
- HSE, Legionella: things to consider (water temperatures)
- HMRC, Fuel and power (VAT Notice 701/19)
- HMRC, Climate Change Levy reliefs and special treatments (Excise Notice CCL1/3)
- Ofgem, Get energy if you are moving home or business premises
Other business types
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