Hotels raise concerns over plans for new tourist tax in England
Hotels and hospitality businesses have raised concerns over plans to give mayors new powers to charge visitors staying overnight, with questions remaining over how high local levie
By The Guardian
Hotels and hospitality businesses have raised concerns over plans to give mayors across England new powers to introduce charges on overnight stays.
The Government has confirmed that mayoral and other eligible strategic authorities will be able to establish an Overnight Visitor Levy, potentially adding an additional charge to stays in hotels and other paid accommodation.
Unlike a flat nightly fee, the levy will be calculated as a percentage of the cost of accommodation.
Ministers say that approach should prevent people staying in cheaper accommodation from paying a disproportionately high charge.
Money raised locally could be invested in areas including public transport, high streets, public spaces, events and attractions supporting the visitor economy.
However, representatives of the hospitality industry have expressed concern about the absence of a nationally prescribed maximum rate.
That could potentially allow different parts of England to introduce substantially different charges, depending on decisions made by their local authorities.
Industry representatives have warned that excessive rates could increase the cost of domestic holidays and business travel while adding another financial pressure for hotels and other accommodation providers.
Some mayors have indicated that they would voluntarily limit any levy they introduce, but hospitality businesses are seeking greater certainty about the framework before the new system takes effect.
The Government argues that giving local leaders control over the charge will allow areas receiving large numbers of visitors to recover some of the costs associated with tourism.
Visitors can increase demand for public transport, street cleaning, public spaces and other local services, while a successful tourism economy can also bring substantial benefits to shops, restaurants and other businesses.
The debate is particularly relevant to the North West.
Manchester already operates a separate visitor charge through its Accommodation Business Improvement District, which was introduced in 2023.
Under the existing Manchester scheme, participating hotels and serviced apartments collect a nightly charge which is used to support activities intended to increase visitor numbers and overnight stays.
The Government’s proposed system would create a wider statutory power allowing eligible mayors and local leaders elsewhere in England to introduce their own overnight levies.
Similar visitor charges are already common in destinations elsewhere in Europe, although the way they are calculated and the amount charged varies considerably.
The Government confirmed the new English levy following consultation on how the system should operate.
Local leaders choosing to introduce one will be required to consult on their proposals and explain how the money raised will be used.
The powers are expected to become available towards the end of the 2027-28 financial year.
The hospitality industry is likely to continue pressing ministers for safeguards as the legislation progresses, particularly around the maximum rate that local authorities could impose and the administrative burden placed on accommodation businesses.
For travellers, the eventual impact will depend heavily on where they stay.
Because individual areas will decide whether to introduce a levy, and determine the rate within the national framework, the additional cost of an overnight stay could vary considerably between destinations.
The debate therefore centres on whether the additional revenue generated for tourism and local infrastructure will outweigh the risk of making accommodation more expensive for visitors and increasing costs for hospitality businesses.