Hotel energy suppliers, tariffs and costs

Running a hotel involves a complex array of energy considerations, from providing guests with a comfortable environment to maintaining operational efficiency. Hotels typically operate 24/7, which means they have a constant need for energy, whether it's for heating, cooling, lighting, or powering kitchen and laundry facilities. As a hotel owner or manager, understanding your energy consumption patterns and finding the right energy tariff can significantly impact your operational costs. With the hospitality industry being highly competitive, optimizing energy usage not only helps reduce expenses but also supports sustainability goals, which can be a selling point for eco-conscious guests.

How much does energy cost for a hotel?

There is no published price list for hotels. What a hotel pays is set mainly by how much it uses in a year, because suppliers price by consumption band, and then by contract length, meter type, payment method and credit history. The most recent government figures (first quarter of 2026, provisional) put the average unit price paid by UK non-domestic customers at 24.14p per kWh for electricity and 5.17p per kWh for gas, including the Climate Change Levy and excluding VAT. A year earlier the averages were 25.74p and 5.54p. The smallest sites pay the most per unit: businesses using under 20,000 kWh of electricity a year averaged 35.02p per kWh, and those using under 278,000 kWh of gas averaged 7.48p per kWh.

Source: Department for Energy Security and Net Zero, Prices of fuels purchased by non-domestic consumers in the UK (Quarterly Energy Prices tables 3.4.1 and 3.4.2), published 30 June 2026. Q1 2026 figures are provisional; next update 29 September 2026. Prices are fully delivered averages including the Climate Change Levy and all other elements except VAT, so standing charges are already spread across the units. Averages across every UK business in a band, not quotes.

Working out a monthly figure for your business

Take the annual kWh from your latest bill or annual statement, find the band above and multiply. A site using 15,000 kWh of electricity a year sits in the very small band: 15,000 × 35.02p is about £5,250 a year, or roughly £440 a month before VAT. A site using 60,000 kWh of gas a year: 60,000 × 7.48p is about £4,490 a year, or roughly £375 a month. Because the smallest band pays a much higher unit rate, a hotel that moves into the next band by growing, or that sits near a band boundary, can see its per-unit price change noticeably at renewal.

VAT and the Climate Change Levy on business energy

The prices above exclude VAT. Business energy normally carries VAT at 20% plus the Climate Change Levy (CCL). HMRC applies the 5% reduced rate, with no CCL, in three cases. First, low usage: supplies averaging no more than 33 kWh of electricity a day (1,000 kWh a month) or 145 kWh of gas a day (4,397 kWh a month) are treated as domestic use whoever the customer is. Second, fuel and power for domestic use, which HMRC defines to include homes providing care for the elderly or disabled, children’s homes, hospices and school or university residential accommodation. Third, a charity’s non-business activities. Where a site is mixed, 60% or more qualifying use means the whole supply is charged at 5%; below that the supply is split between the two rates, and the customer gives the supplier a certificate declaring the qualifying percentage. Source: HMRC VAT Notice 701/19 (sections 2.8, 3.2 to 3.5, 4.2 and 5.2, updated 5 February 2025) and gov.uk VAT rates.

Is a hotel a microbusiness?

Ofgem treats a business as a microbusiness if it has fewer than 10 employees (or their full-time equivalent) and an annual turnover or balance sheet total of no more than £2 million, or if it uses no more than 100,000 kWh of electricity or 293,000 kWh of gas a year. A business can be a microbusiness for one fuel and not the other. Independent hotels that meet either test are covered by Ofgem’s microbusiness rules, which give extra protections around contract terms and renewals (Ofgem: get energy for your business).

Do business energy rates vary by region?

Yes. Part of every unit rate covers the cost of the local electricity distribution network, and Great Britain has 14 licensed distribution areas each with its own charges, so identical contracts are priced differently in, for example, the north of Scotland and London. DESNZ does not publish non-domestic prices by region, so regional figures quoted elsewhere are supplier or broker estimates rather than official statistics.

Which energy supplier is best for hotels?

No supplier specialises in hotels or publishes tariffs specific to them. The cheapest supplier for one business is often not the cheapest for the next, because each prices on the consumption band, meter type, contract length and credit profile in front of it. Compare the total annual cost of like-for-like contract lengths rather than the headline unit rate, and check the standing charge and any out-of-contract rate before signing.

Energy usage profile for Hotel

Hotels have a high and varied energy demand due to their 24-hour operations. Energy usage is heavily influenced by guest occupancy, with peaks often occurring during mornings and evenings when guests are most active. Key areas of consumption include guest room heating or cooling, water heating for showers and laundry, and kitchen appliances. Lighting, both in guest rooms and common areas, also contributes significantly to overall energy use. Implementing energy-efficient practices and technologies can help manage these demands effectively.

What affects bills for Hotel

Several factors can influence the energy bills for a hotel:

• Occupancy rates: Higher occupancy increases energy consumption.
• Building size and age: Older buildings may be less energy-efficient.
• Seasonal variations: Heating in winter and cooling in summer can spike usage.
• Operational hours: 24/7 operations require constant energy usage.
• Energy efficiency measures: Use of energy-efficient appliances and lighting can manage costs effectively.

How to compare tariffs

When comparing energy tariffs for your hotel, consider the following checklist:

• Review your current energy consumption patterns and identify peak usage times.
• Look for tariffs that offer flexible rates to match your usage profile.
• Consider dual fuel tariffs if both gas and electricity are used extensively.
• Check contract terms and length, especially if planning future expansions.
• Evaluate the benefits of green energy tariffs to attract eco-conscious guests.

Gas vs electricity considerations

For hotels, both gas and electricity are essential, but their importance may vary based on facilities. Electricity is crucial for lighting, electronics, and air conditioning, while gas is often used for heating and hot water. The choice between gas and electricity can depend on factors such as the size of the hotel, the climate, and the efficiency of existing systems. Balancing both efficiently can lead to improved cost management.

Switching process overview

Switching energy suppliers for your hotel involves several steps:

1. Review your current contract and check for any exit fees.
2. Compare available tariffs suited to your hotel's energy usage.
3. Select a new supplier and confirm the switch with them.
4. Provide the new supplier with your hotel's latest meter readings.
5. Ensure all outstanding payments with the current supplier are settled.
6. Monitor the switch to ensure a seamless transition with no disruption.

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