Wales at 'saturation point' for holiday lets as desperate owners slash prices to meet 182-day rule

Wales has reached market saturation for holiday lets, operators have claimed. As more are opened, it’s becoming harder to turn a profit in a sector already battling rising costs and, in 2024, poor weather.

Overshadowing everything is the sector’s new 182-day occupancy rule which, if not met, can mean punitive extra costs. It’s left some holiday let operators refusing to accept short break bookings despite soaring demand from consumers in preference to traditional week-long stays.

A limited survey commissioned by Wales Tourism Alliance found 4% of holiday let operators in Wales were now in “survival mode”. Some 12% are performing “poorly” while 40% are seeing a "mixed picture". Despite a net 8% increase in visitors last year, compared with 2023, profits across the board were down 8% against those in 2019.

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The 182-day rule, rising costs and a glut of holiday let owners piling into the Welsh market, were the biggest challenges being felt. One operator told the survey: “Our occupancy was well down in 2024. One major contributor is the 10 new self catering units/properties that opened this year within a mile of us.”

Another wrote: “The self-catering market is saturated with and an over-supply (of lets). The sector has been allowed to run out of control by the government for far too long. Now it’s in a bad state.” Join the North Wales Live Whatsapp community now

Since April 2023, operators in Wales must let out their holiday properties for at least 182 day each year, up from the previous threshold of 70 days. Failure to meet this figure will see them switched from paying business rates to more costly council taxes. In counties that have imposed extra council tax premiums, the charges can be enough to sink businesses, the sector has said.

The WTA survey was carried out in October 2024, for the first time in collaboration with the UK’s three other tourism alliances. One Welsh operator told the study: “Literally the only thing that matters at this stage in the year, after a poor April, September and October, is to hit 182 nights at any cost, to avoid the double council tax fine which would take the majority of this year’s poor profits.

“There is no way we can risk paying local trades for any non-essential work - this after 10 years of happily ploughing a large proportion of profits into the local economy to pay for improvements to our cottage. (It’s a) completely nonsensical way to run a business, favouring really cheap week stays over short breaks that could bring in more profit, give cleaners twice the work and likely generate extra visits to local amenities. But the risk of losing nights-booked is too high."

One Welsh business told survey it will “have to close” if it fails to hit 182 days this year. Others are trying to reach the target by “heavily discounting” holiday breaks. This sense of uncertainty is forcing some operators to stop investing on maintenance and upgrades to their properties. One spoke of “gradually having our kitchens removed”.

Two key dilemmas facing the sector are the rising popularity of short-term breaks and cash-strapped holidaymakers booking last minute. Both are hindering attempts by operators to hit 182 days.

One business wrote: “People seem to be booking later, and many are wanting short breaks. It’s very stressful trying to decide whether to accept them, or hold out for more nights. With every short break I take or decline, I’m gambling losing half my profits on the council tax fine.”

Another added: “Guests want short breaks. We can’t afford to offer them because we’d fail 182 days. The Welsh Government has applied general purpose weedkiller to the whole sector rather than target the properties they would like to free up for housing.”

The number of domestic visitors coming to Wales fell last year, according to the tourism and hospitality businesses surveyed. Yet overall volumes climbed 8% thanks to a 20% jump in overseas tourists, who largely stay in hotels. Some B&Bs and holiday cottages have been left battling to stay afloat as customers feel the pinch and suppliers hike their prices.

Bad weather was cited by 40% of businesses as a brake on profits, while a third mentioned the perceived high prices of domestic holidays compared with overseas destinations. Rising “anti-tourism” sentiment in Wales has also been blamed for last year’s dip in domestic visits.

A raft of tourism policies rolled out by Cardiff has fueled a belief the holiday sector has been cast adrift. The planned tourist tax is due in 2027 is further deepening the gloom. While not all operators are struggling – the survey found that 44% are performing “quite well” and 4% are doing “very well” - there’s a sector-wide desire for an urgent review of the 182-day rule.

Not least because it’s having little or no impact on freeing up housing availability for local people, according to a Pembrokeshire business owner. They wrote: “There are fewer comments on (online) message boards that the policies will create more affordable homes for local people as residents realise this hasn’t happened.”

A rental limit of 140 days has been suggested, to bring Wales into line with England, but the Welsh Government has so far resisted change. Monmouthshire Council is among the local authorities alarmed by the high threshold, fearing it could affect the council’s ability to raise funds from the incoming tourist tax.

For one holiday let operator, a 182-day review can’t come soon enough. “There are not magically more visitors,” they said. “Just holiday lets losing much needed business. Even ones that previously operated successfully under 182 nights are having to do anything they can to get over the line.

“Each business knows what they need to turn the right profit for them. Many are run by pensioners who don’t want to work themselves into the ground, nor do they need to. It doesn’t mean they can afford the council tax fine on top. Many large houses earn very good money on weekends, and have the weeks off - that’s their business model. They shouldn’t be forced into trying to operate in the couples market, which the one-beds thrive on.”

WTA chair Rowland Rees-Evans said the Article 4 planning regime in Gwynedd, which seeks to control numbers of holiday lets and second homes, is another potential constraint. He said the raft of government tourism policies were placing “significant burdens on local people” who employ up to 20% of people in counties like Anglesey - where “alternative employment is scarce”.

He added: “Whilst we recognise that many of these policies derive from the need to provide local homes for local people, it is evident that they are not having the desired outcome. We are only just starting to see the bigger economic impact of consistently hitting a sector that is a significant driver of the Welsh economy.” Sign up for the North Wales Live newsletter sent twice daily to your inbox

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