Visitor taxes, tourism levies, bed taxes, call them what you will, are spreading around the world as surely as the tourists themselves, with similarly mixed reactions.
The motivations behind them are also varied. In locations such as Venice, where summer overtourism is an annual feature, the hope is that these taxes can be used to limit and shape the visitors coming in. The taxes apply to day trippers who contribute the least to the local economy, with longer stays encouraged.
In other destinations, the growing role that travel and tourism plays in the economy has been noted, encouraging thoughts around how this bounty can be used for the benefit of all. In the United Kingdom, Bath & North East Somerset Council and Cambridge City Council have written to Deputy Prime Minister Angela Rayner calling for a debate on how to support sustainable tourism in heritage cities. Kevin Guy, leader of Bath & North East Somerset Council, said: "Having the sort of powers now being introduced in Scotland and Wales would allow us to reinvest directly into the services and infrastructure that make these visits possible.”
There’s a lot to love about tourism taxes if you’re in the business of collecting them and, really, can you even call yourself a tourist destination if you don’t have one?
For the hotel sector, the enthusiasm has been more muted. In Wales, David Chapman, executive director of UKHospitality Wales, said: “While we don’t agree with the introduction of visitor levies, which place an additional burden on already overstretched businesses and impact the ability of Welsh tourism to remain competitive … it’s crucial that hospitality is made central to the process. The sector must be the primary beneficiary of any funds directly raised, so that we can invest in the local economy, drive job creation, and boost economic growth right across Wales.”
For some destinations trying to move themselves up the chain scale and attract higher-spending travelers, there may be opportunity in a visitor levy.
Chapman’s central point was that money raised by tourism should benefit tourism.
Where there may be opportunity for all — tourists and locals alike — could be in following the example of destinations in the U.S. and using the income from visitors as a revenue stream to fund visitor attractions and tourist infrastructure.
In the case of the new stadium for the Chicago Bears, close to 28% of the reported cost of the project would be met by extending bonds of the existing 2% hotel tax.
The result would be a high-tech stadium which attracts guests and a new venue which the locals can also enjoy. The latter point should be key to the motivation of local jurisdictions when dealing with a population which is firing up its water pistols every summer; what if you got something out of tourism, too?
Could England follow the example set in Scotland and Wales? On agreeing Edinburgh’s scheme, Donald Emslie, non-executive chairman at the Edinburgh Tourism Action Group, said: “This new income stream presents a unique opportunity to generate significant funds for the city’s long-term development. The levy’s potential to generate transformative funds for the benefit of all who live, work and visit Edinburgh is well-recognized and I’m pleased to see a decision made to declare a scheme which will not only support spending on city operations and infrastructure, but sustain Edinburgh’s cultural offering and destination and visitor management.”
Business improvement districts provide a mechanism to access money, but have short, five-year lifespans. To create a more permanent structure, which would also provide long-term reassurance enabling master planning, a change to primary legislation would be required.
And with that, the full phalanx of committees to decide on core objectives, governance and the transparent reporting of output and results. Whether this would be regional — allowing for greater-Swiss style participation and ultimately ownership by the local community — or national, would also need to be decided.
In the U.S., the WTTC reported that travel and tourism contributed $2.6 trillion to the economy last year and supported more than 20 million jobs. It also contributed more than $585 billion in tax revenue annually, accounting for almost 7% of all government income. The organization reported that the sector contributed £286 billion to the U.K. economy last year, but warned that public policy, including cuts of more than 40% to VisitBritain’s budget, would hamper growth in 2025.
Julia Simpson, WTTC President & CEO said: "Other European countries see the economic value of travel and tourism, but in the U.K. it’s taken for granted. Now the government is actively damaging growth. The loss of regional support is particularly concerning. Without dedicated marketing and investment, regions outside London will struggle even more to attract international tourists, despite their huge untapped potential.”
As the Taylor Swift and Oasis tours have illustrated, there is a building appetite for events-based tourism, driven by a wider move toward experiences. A model utilizing locally applied tourism levies such as hotel taxes could be used to fund major investment in new public buildings, venues and attractions, which meet local demand and generate increased visitor numbers, driving revenue back into the tourism economy.
Could following the lead of the U.S. help release this potential?
Joe Stather is managing director for HTL in the UK with Crowe UK and Horwath HTL.
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