Introducing tourist taxes in England has been described as “throwing a drowning man a brick”, piling more pressure on the already struggling hotel industry.
Hoteliers, from large chains to small businesses, have criticised the government’s announcement that mayors and local leaders will be able to raise a tourist tax, also referred to as a visitor levy, on visitors staying overnight in their areas.
Serena von der Heyde has run Georgian House Hotel in London for almost 40 years as an independent, family-owned business, but says her hotel is facing the hardest period she can remember in terms of taxation and limited opportunities for growth.
“We'd had several months this year of not hitting our budget, which is really unusual for London because it's usually really robust,” she said. “We're seeing dropping numbers as far as European visitors are concerned.”
Ms von der Heyde has 50 employees in total to run the 60-room Pimlico hotel, but has recently had to combine staff roles, reduce budget and roll back output for guests. She also notes that the UK has one of the highest VAT rates for hotels, at 20 per cent.
The hotel owner said that adding another five per cent tourist tax on top of this is like “throwing a drowning man a brick”.
She added: “There are businesses going under every single week. People are trying to sell, but we can’t because nobody wants to buy our businesses; they don’t want to be in our position.”
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Specific administration terms have yet to be laid out, but if the Greater London Authority chooses to introduce a tourist tax, Ms von der Heyde is concerned about how it is going to be collected, how it will be processed and whether new software will need to be used.
She said: “There's going to be a lot of admin involved in that. I just cut my staff. My receptionist is already doing two jobs. I can't give them another admin job on top of that. We’re at capacity.”
Larger hotel chains have also criticised the tax. A spokesperson for Premier Inn owner Whitbread said it would be “hugely damaging for hospitality”, while Jon Hendry Pickup, chief executive of Butlin’s, said that no national upper limit could “burden” resorts like theirs and risks making family holidays less affordable.
Meanwhile, hotel giant Hilton said the move was a “catastrophic blow” for businesses and would “stifle” hiring.
Welsh residents have also voiced mass opposition to introducing tourist taxes. In late September, Anglesey council rejected introducing a nightly fee for now, due to concerns over the impact on tourism, while Gwynedd and Conwy councils postponed a decision on a tax.
While Scotland and Wales have already introduced laws allowing councils to introduce a tourist tax, England only followed suit this year, bringing the country in line with many popular tourist destinations worldwide that also have tourist taxes.
Under current government proposals, the power will only be given to metro mayors and leaders of the foundation strategic authorities, which operate as devolved powers without mayors.
Eddie Nelder, who owns hotel chain Choice Hotels, with three properties in Blackpool, believes that a tourist tax is better suited to large cities rather than seaside resorts.
Blackpool is a constituent member of the Lancashire Combined County Authority, which is one of two foundation strategic authorities in the UK, alongside Devon and Torbay.
“Blackpool is a working-class resort to some degree, and we compete with the likes of Benidorm,” he said. “Why would the government make it harder for us to compete with abroad? It just baffles me.”
Mr Nelder employs over 350 people to handle the 400 rooms he offers across his hotels. He explained that raising room prices does not help and that he has had to cut about 38 staff from his workforce just to try to save money.
“When we put hotel rates up, visitors don't come,” he said.
It may still be years before the first English statutory tourist tax appears, as a bill needs to be introduced, local spending plans need to be formalised, and consultations will need to be held with residents and local businesses.
Outside England, Edinburgh is the only area in Britain with a statutory tourist tax, which adds a five per cent fee to overnight stays in the city. Owners of self-catering accommodation in the city have concerns it will put pressure on small businesses and potentially encourage the holiday let black market to thrive.
Labour’s regional mayors are expected to follow a similar five per cent fee if they introduce a tax in their area, while Reform and Conservative leaders are likely to oppose a levy. However, no upper limit has been set on how much the tax can be.
The government said any tourist taxes introduced will directly benefit England’s tourism hotspots by investing money back into the community as well as enhancing the tourism output.
Mr Nelder argued that if such a tax was introduced in Blackpool, it could do more harm than good.
He said: “Blackpool’s microclimate economy must all revolve around hospitality. I spend a million pounds a year with the butcher locally. I spend a million pounds on refurbishments with a plumber, an electrician. All these people locally earn money from me. So taking the money out of hospitality doesn't make sense, it is already doing everything for that area.”
Ms von der Heyde added that the hospitality industry should not be “unfairly laden with tax” and that an area's economic growth should be spread across all sectors.
She also argued that London doesn’t need a boost to tourist attractions and facilities. “London is packed with beautiful experiences in absolutely tip-top condition, with wonderful tourist experiences,” she said. “I can't see where they're going to put money that's going to make any impact on tourists' experiences.”
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