OPINION: Proposed visitor levy: Simplicity, consistency and growth must be at its heart
The All-Party Parliamentary Group (APPG) for Hospitality and Tourism has published the findings of its inquiry into the UK Government’s proposed overnight visitor levy.
Online Travel UK (OTUK) contributed written evidence, alongside various businesses and organisations from the UK hospitality and tourism sector.
We welcome the APPG’s recognition that significant safeguards must be put in place if the government chooses to proceed with the levy.
Inbound tourism is a significant contributor to the economy and supports businesses, jobs and communities across the country. Giving local leaders greater powers to invest in their visitor economies could deliver benefits, but any new levy must be considered against the government’s wider ambition to grow tourism.
For OTUK members, the question is not simply whether a levy is introduced, but whether it can be designed to be proportionate, consistent and workable for the businesses expected to administer it - while avoiding unnecessary costs and complexity for consumers.
Avoiding a patchwork of different schemes
One of OTUK’s main concerns is the potential for a fragmented system to emerge. Allowing both Mayoral Strategic Authorities and Foundation Strategic Authorities to introduce levies without a strong national framework risks an uneven regulatory landscape with inconsistent rules, rates, and exemptions from the start.
This is particularly challenging for online travel companies and other businesses operating nationally, which may need to identify, calculate, communicate and potentially collect different levies across thousands of accommodation bookings.
That is why OTUK has called for a clear national framework to be established from the outset, providing consistency on the design of a levy. Local flexibility should not come at the expense of a system that businesses and consumers can easily understand.
Simplicity from the start
The experience of Scotland’s visitor levy implementation has demonstrated how complexity can become embedded in a scheme.
OTUK believes that, if the government does proceed, a simple flat fee per accommodation unit per night would be preferable to a percentage-based model. A flat fee provides greater certainty and is considerably simpler to calculate and administer.
A percentage model, by contrast, risks additional complexity, particularly if businesses are required to separate different elements of an accommodation booking to determine which parts are subject to the levy.
A level playing field
Any levy must be applied consistently across the accommodation market. OTUK supports the inclusion of all commercially let overnight accommodation, from hotels, guesthouses and B&Bs to short-term lets and campsites.
A broad and consistent scope helps maintain a level playing field and minimises distortions in visitor choice and complexity for providers.
The same principle should apply to exemptions. While there are legitimate circumstances where national exemptions are appropriate (such as charitable or non-profit accommodation provided for shelter, respite, or refuge), multiple local exemptions would add another layer of complication for businesses operating across England.
Online travel businesses must, by law, accurately display the full price payable by the consumer, including any levies or taxes. If exemptions are introduced it makes it difficult or impossible for our members to accurately calculate and display the levy as the law requires, particularly when the exemption depends on information a travel intermediary does not have.
Businesses need clarity over responsibility
There must be clarity about who is legally responsible for a levy. OTUK believes that while intermediaries and digital platforms can assist with assessment, collection, and payment, overall legal responsibility should ultimately remain with the accommodation provider. They are the ones who have actual contact with the guest, whereas bookings online are often made months in advance and frequently change before the stay.
Meaningful industry engagement during the development of the framework will be essential.
Revenue must support local economic growth and improve the visitor economy
OTUK supports revenues being used to enhance the local visitor economy, including investment in tourism infrastructure, visitor services and enhancements that benefit both visitors and the accommodation sector. Given the possibility of the levy dampening demand for tourism, a significant chunk should also be ringfenced for spending on local destination marketing.
That should be accompanied by transparent reporting, clear accountability and meaningful consultation with the businesses helping to generate those revenues. A visitor levy should not simply become an additional source of funding for unrelated services.
Growth must remain the objective
The government needs to consider the proposed levy alongside its wider ambitions for the visitor economy. The UK is competing internationally for visitors and investment, while domestic travellers make choices about where and how often they can afford to travel. Any additional cost or administrative burden needs to be weighed carefully against its potential impact on demand, competitiveness and growth, with the APPG rightly calling for a comprehensive assessment of the economic impact before any levy is introduced.
OTUK welcomes the APPG’s focus on ensuring appropriate safeguards are in place. As the government considers its next steps, it should work with industry to create a framework that is nationally consistent, simple to implement and transparent in how revenues are used.
