Rachel Reeves risks triggering a chain reaction with a new policy, an expert has warned. The Chancellor has announced that she plans to give local leaders the power to impose so-called tourist taxes in their areas.
In England, mayors will have the power to raise a "visitor levy" on overnight accommodation, and the Government will "explore the option for this power to be extended to the leaders of other strategic authorities," the Treasury said in the autumn Budget. Ministers say the tax will fund "further investment in growth locally, including the visitor economy."
But Ashley Seed, Chief Commercial Officer at CMAC Group, a corporate ground transport, accommodation, and disruption management firm, has said it could have unintended consequences across business travel, impacting airlines, hospitality, and public transport providers.
He said: "Business events are catalysts for economic growth, innovation, and skills development, and should not be treated as leisure tourism; any measures that hinder this activity risk triggering a chain reaction across the economy."
"While tourist taxes are often aimed at leisure travellers, business travel budgets are not immune. Even a modest per-night levy can quickly add up across multiple trips, especially for companies with frequent travel schedules."
"This can create budget pressures, forcing organisations to reconsider how they book accommodation, flights and transport."
The cost does not sit in just one department, the expert emphasised, and can ripple through procurement teams, HR and finance, as companies balance the need for essential travel against additional charges that were not previously factored into the budget.
Manchester imposed a visitor levy in April 2023, generally costing £1 per room per night, plus VAT. Mr Seed said that for an SME taking between 150 and 200 business trips a year, this could add between £500 and £700 annually to travel budgets. For larger firms with hundreds of trips, the figure quickly rises into the thousands and more, he added.
Similar charges have also been introduced in Liverpool, with Edinburgh next on the list, introducing a 5% levy in July. Mr Seed said that this may appear modest on paper, but, when applied to average business travel spend, which, according to the Great Britain Tourism Survey, is £516 per person per trip, it equates to around £25 extra per journey.
The expert added: "This can rapidly add up, especially if more than one person or team is travelling. For a typical SME over 100 business trips a year, that could mean an additional £3,000 or more added to annual travel spend, before factoring in multi-city travel or large corporate events or tickets."
"Business travel supports a wide network of services, from hotels and airlines to rail operators, taxis, and public transport. This means that additional levies can reduce overall spend, as budgets must factor in this extra cost. Ultimately, providers who rely on business travel revenue are impacted."
