The hospitality industry fears a tourist tax will drive visitors away – the evidence disagrees

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Ministers and regional mayors across England are pressing ahead with plans to let local authorities levy a charge on overnight stays, prompting a sharp clash with the hospitality trade over whether such a tax would harm tourism. Mayors including Andy Burnham have been pushing for the power to set a percentage-based charge on accommodation, rather than the flat per-night fee originally floated, with no cap proposed on how high individual regions could set it. Supporters argue the money raised, potentially well over a billion pounds nationally, could fund local services, attractions and cultural events, while critics in the hospitality sector warn it risks adding significant costs to family holidays and driving business away from areas that adopt it.

Industry bodies have been vocal in their opposition. UKHospitality has warned that a 5% levy on overnight stays in England could lead to millions of fewer visits and tens of thousands of job losses, adding to pressure on a sector already contending with rising taxes, higher employment costs and the lingering effects of Brexit, the pandemic and global instability. Its chief executive has argued that UK holidays are already comparatively expensive once VAT is factored in, and has contrasted the open-ended nature of the proposed English powers with schemes in cities such as Paris, Rome and Berlin, where tourist taxes are said to be capped. Some Conservative and Reform-led areas, including parts of England's east coast, have already signalled they will not introduce the charge, raising the prospect of a patchwork of levies across the country that could influence where visitors choose to stay.

Despite the industry's alarm, evidence from cities that have already introduced overnight levies paints a more mixed picture. Visitor numbers to Amsterdam, Barcelona and Venice, all of which impose tourist taxes intended partly to curb overtourism, have continued to climb over the past decade, suggesting the charges have done little to deter travellers even in Amsterdam, where the additional cost is among the highest in Europe. In England, Manchester introduced the country's first such levy in 2023, a modest £1-per-room-per-night charge established by local hospitality businesses themselves rather than imposed by government, and academic research has since found no meaningful effect on hotel occupancy. The scheme is reported to have generated more than £10m for cultural projects in its first three years, with Liverpool operating a comparable charge that has raised a smaller but still notable sum for sport, culture and conference funding.

The reporting also reflects differing political framings of the same policy. One account focuses on the empirical record, weighing hospitality's fears against the apparent resilience of visitor numbers in European and English cities that already charge a levy, and notes that Scotland and Wales are moving ahead with their own versions, with Edinburgh having introduced a 5% charge over the summer. The other centres more on the Westminster politics of the announcement, describing a gathering of Labour mayors, Angela Rayner's involvement despite not attending in person, and pointed criticism from Conservative figures who reject the tax outright, alongside industry warnings that it amounts to a 'kick in the teeth' for businesses. Together, the sources suggest a debate split between concerns about cost and fairness on one side and a growing body of evidence, still contested by the industry, that such levies have not obviously suppressed tourism where they have been tried.

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