Mayors in England are set to be given powers to introduce an uncapped overnight visitor levy, with business events bodies warning that the additional accommodation costs could make UK destinations less competitive for conferences, exhibitions and incentive programmes.
The levy, dubbed a “tourist tax”, would be charged as a percentage of accommodation costs rather than as a flat fee, with local leaders deciding whether to introduce it and how the revenue should be invested. There is expected to be no national cap on the rate mayors can set.
The Business Travel Association (BTA), beam (business meetings accommodation and events) and the Meetings Industry Association (MIA) have warned that the impact could be particularly significant for business events, where a single conference or exhibition can generate hundreds or thousands of room nights.
“Business travel is not tourism, and there is a real risk that distinction gets lost in this debate. Adding another accommodation charge on top of the UK’s existing 20 per cent VAT makes Britain more expensive for the very people and businesses we need to attract,” the organisations said in a joint statement.
They warned that organisers compare destinations closely on cost, meaning an additional accommodation charge could influence where an event is held.
“If the cost of bringing an event to one UK city becomes uncompetitive, they can choose another destination - taking with them spending on venues, hotels, restaurants, transport and local suppliers,” they said.
The groups also highlighted the risk of a fragmented approach, with individual regions potentially setting different rates and rules.
“A patchwork of different charges and rules could make it harder for businesses to operate and leave the UK looking disjointed to international markets,” they said.
The organisations are not opposed to visitor levies in principle, however, arguing that they can provide valuable funding if the money is reinvested in infrastructure, services and destination marketing that help attract events and visitors.
That question of what the money delivers for destinations is likely to be central to the business events debate.
London mayor Sadiq Khan has previously backed a visitor levy in the capital. Analysis commissioned by Central London Forward estimated that a 3 per cent levy on hotel and short-term accommodation stays could raise more than £350m a year for London.
Greater Manchester has already introduced a £1 per room per night City Visitor Charge, while Scotland allows local authorities to introduce visitor levies. Edinburgh introduced a 5 per cent levy on overnight accommodation in July, capped at five nights.
The English proposals would potentially allow combined authorities to adopt a percentage-based levy instead, meaning the amount paid would increase with the cost of accommodation.
Hospitality industry representatives have also raised concerns. Allen Simpson, chief executive of UKHospitality, said the proposals were “not going to be painless”, warning that an open-ended power for mayors to impose tourism taxes could result in significant additional costs for visitors.
“What we’re talking about here is an open-ended power for mayors to set tourism taxes at any level they want,” he told BBC Radio 4's Today programme. “And remember that if you go to Paris, if you go to Rome, if you go to Berlin, you’re paying a small tourism tax, but it’s capped.”
UKinbound has separately criticised the decision to use a percentage-based model, arguing that it will create additional administrative complexity for accommodation businesses and visitors.
Joss Croft OBE, CEO of UKinbound, said: “The Government appears to have chosen the most complex and least practical way possible to introduce an overnight visitor levy in England.”
UKinbound supports a national framework and allowing mayors to decide whether a levy is appropriate, but is calling for a nationally consistent fixed banded model instead.
“A percentage-based model will create unnecessary administrative burdens for tens of thousands of businesses across England, add complexity for visitors and risks repeating many of the challenges already emerging in Scotland,” said Croft.
The government says local leaders and voters should decide what is appropriate for their area and how revenues are invested.
