The government has published proposals that could allow mayors in England to introduce a tax on overnight stays, a move that has drawn criticism from travel firms and hospitality chiefs.
On Thursday (September 10), the Ministry of Housing, Communities and Local Government outlined plans for a visitor levy, which would let local leaders charge a tax on accommodation costs for overnight visitors. Downing Street has said the scheme would help communities keep more of the benefits from tourism, with mayors able to reinvest the funding in priorities such as transport, high streets and public spaces.
How much could the levy add?
Business and Consumer Editor for the Mirror, Graham Hiscott, has explained how the levy could affect holidaymakers. "For instance, a theoretical 5% levy on a mid-week room at a Premier Inn in Newcastle early next week would add £3.70 per night. If there's two person staying then that's £1.85 each," he said. "At the other end of the scale, a stay in a twin room at London's top end hotel, The Savoy, costing a cool £1,300 a night, it would add another £66."
Hiscott also noted that holiday park chain Haven estimates a 5% levy would add £152 to the cost of a two-week holiday in one of its basic caravans at its North Yorkshire site next summer.
Industry warnings and opposition
Hospitality chiefs have warned the uncapped proposals could cost the British tourism industry as much as £1.6 billion, claiming "33,000 people could lose their jobs as a result of this tax". A spokesperson for UKHospitality said: "Its holiday tax works in direct opposition to all of those statements and the Government's goals to create jobs in every postcode and reduce the cost of living."
Major businesses including Premier Inn owner Whitbread and Butlin's have urged the Labour Government to rethink the policy, claiming it "risks making family holidays less affordable, damaging demand and making it harder for businesses to hire young people". Jon Hendry Pickup, chief executive of Butlin's, said: "Big cities may welcome these mayoral powers, but treating every destination and hospitality business the same will leave resorts like ours to shoulder the burden."
Comparisons and existing schemes
Tourist taxes are already common in other countries. Local French authorities can charge a tax for each person staying, varying by location and up to €2 (£1.70) per day per person. In Italy, the charge depends on the city; in Rome it ranges from €3 (£2.60) to €7 (£6) per person, per night.
Andy Burnham, when mayor of Manchester, introduced the City Visitor Charge in April 2023, a £1 per room, per night fee. More than £2 million was raised in the first year since Liverpool introduced a £2 overnight stay levy.
While mayors in England would have the power to introduce a tax under the proposed changes, it would not be mandatory. Mayor of Tees Valley, Ben Houchen, posted on X last November: "I won't be using this power. There will be no tourist tax in Teesside, Darlington and Hartlepool for as long as I'm Mayor. Thanks, but no thanks."
Plans for the tax were first announced under Sir Keir Starmer, following similar schemes introduced by the devolved administrations in Scotland and Wales. Ministers plan to introduce legislation establishing the levy "in due course", with mayors expected to set out their plans by March 2028.
