Growing talk of tourism taxes in the UK were tempered by demands for a relaxation of tax and regulation as the sector can under increased cost pressure.
The comments came as destinations including Amsterdam shifted promotional activities to redirect rather than attract tourists.
A study by the All Parliamentary Group for Hospitality reported that local services countrywide were under pressure and councils were looking for a new potential revenue generator to remedy the shortfall. The Local Government Association recommended to the APPG that councils should have the option to introduce a tourist tax in consultation with their communities and businesses.
The report looked at the ‘European Model’, identifying that in 18 of the EU28 countries there was a levy charged on overnight visitors, but that this was balanced by lower VAT, such as the 10% levied in Spain. It was also noted that corporation tax in the UK was 19% (and falling to 17% by April 2020) whereas in Germany it was as high as 33%.
Bath, Liverpool and Cumbria councils have expressed interest in introducing a tax. In Edinburgh, the most progress has been made towards introducing a tax. In Edinburgh, the local council voted to introduce a tourist tax in February 2019. However, to introduce this tax there would need to be primary legislation from Holyrood.
A study undertaken by STR at the end of last year found that, when asked what effect a tourist tax would have on their overnight stays in Edinburgh, three out of every four visitors said it would have no effect on their stay, with only 2% of travellers asked commenting that they definitely wouldn’t travel to Edinburgh.
STR said that its evidence suggested that a tourist tax would see a reduction in spend for 9% of travellers who would choose cheaper accommodation to help deal with the cost of the tax.
Meanwhile, 6% of tourists indicated they would have visited the city but stayed outside of it to avoid paying the tourism tax. Combined with the 2% who would not visit at all means that, 8% of Edinburgh’s overnight visitors would not be contributing to the levy.
UKHospitality CEO Kate Nicholls said: “With local authorities under so much pressure financially, it is perhaps no surprise that they are turning in desperation to flawed policies such as the tourist tax to drum up cash. Funding levels for councils ought not to be allowed to trickle down all the way to the front line of businesses but it is having a visible effect. We sympathise with the difficult situation that councils around the UK find themselves in but we need a resolution that does not place an unfair financial burden on valuable hospitality businesses.”
Nicholls told Hotel Analyst: “There is no spare capacity for additional costs, we can’t do anything different and cannot find anything more without either cutting tax or cutting regulations.
“I don’t think it will be the end of the tourism tax debate as local authorities are still dealing with overtourism in locations such as Edinburgh and Bath and there are still cutbacks to destination tourism. The debate will remain live but will be more nuanced around how not to kill the goose that lays the golden egg. People are aware that we have a highly-taxed, highly regulated product at a time when there is a discrepancy between outbound and inbound travellers.”
Outside the UK, in The Netherlands the tourist board released a strategy document in which it said that: “To control visitor flow and leverage the opportunities that tourism brings with it, we must act now. Instead of destination promotion, it is now time for destination management”.
The organisation said that it expected the number of visitors to The Netherlands to rise from 19 million to 29 million over the next decade.
In Paris, employees in the Louvre walked out after overcrowding was exacerbated by works taking place around the Mona Lisa. Management has since promised more staff. Christian Galani of the CGT Culture union, told Bloomberg: “It’s a short-term band-aid dressing to the problems of overcrowding. Thirty extra temporary workers will be hired in June. But what we want are permanent civil servant positions to solve the problem once and for all.”
The Louvre, in line with a number of museums around Europe, has moved into offering only online pre-booked tickets, in an attempt to control overcrowding.
HA Perspective [by Katherine Doggrell]: Anyone who lives in a popular tourist city will tell you; the locals become very devious when it comes to finding back alley routes around town and, for the main, it works. They’re not using the post office. You’re not hanging out in the Roman Baths all day.
But when your city is condensed into a small, fascinating space, as in Venice or Amsterdam, there comes a point where it is impossible to deny that the residents are being crowded out by the swarming next to their front doors.
Peer-to-peer lodging has bumped along relatively happily with hotels, without too many convincing attacks on performance, as both parties have been able to enjoy the swell of tourists travelling the globe. But the threat not only to local services, but to local residences themselves, has helped to focus the mind of local authorities and encouraged moves in two directions: to see hospitality as a source of hole-plugging revenue while also looking to deter visitors.
For taxation to work and support services, it needs to be ring fenced to ensure it’s going where it says it is. For it to work and limit visitors it will have to be hefty. As visitor numbers swell, they are unlikely to be convinced by promotions luring them to Rotterdam over Amsterdam, but stories of overcrowding are likely to be self regulating and the savvy traveller will look more to the shoulder seasons. Venice in a gondola in the freezing cold has its own charm.