With a government consultation on a proposed national tourist tax now closed, a significant rift has emerged between ministers seeking new funding powers for regions and hospitality leaders who warn the policy threatens to devastate an already struggling sector.
The consultation on an “overnight visitor levy” for England concluded on February 18, a policy within the English Devolution and Community Empowerment Bill that would grant mayors the power to add a small charge to overnight stays in commercial accommodation. The aim is to raise revenue for tourism infrastructure and projects.
However, the accommodation sector is pushing back hard, citing a confluence of financial pressures. Industry body UKHospitality has warned of a “perfect storm” created by rising employment costs, soaring business rates, high energy costs, food price inflation, and increased National Insurance, with a third of businesses said to be at risk of failure. The 2026 business rates revaluation has seen rateable values nearly double for some providers.
Adding to the urgency of their case, new research indicates stark economic risks. The World Travel & Tourism Council estimates that a £10 per-night tourist tax could lead to £14.4 billion in lost tourism spending by 2027 and tens of thousands of job losses, warning of a “domino effect” across the tourism value chain.
Local Success vs National “Bureaucracy”
Leading the call for caution are the very organisations that have successfully implemented local versions of the levy. The Accommodation Business Improvement Districts (ABIDs) in Liverpool and Manchester have issued a joint statement urging the government to slow down, arguing the national plan lacks the careful groundwork of their own models.
“This is too complex an issue to be rushed and we would urge the Government to slow down and think this through,” stated Bill Addy, chief executive of Liverpool BID Company, and Vaughan Allen, chief executive of CityCo in Manchester, in a joint response to the Ministry of Housing, Communities and Local Government. They emphasised that their ABID models took years of consultation and planning, are private sector-led, and put the hotel industry at the heart of strategy.
The results, they argue, speak for themselves. Over the next two years, the two ABIDs are forecast to invest upwards of £17 million in Manchester and Liverpool, funding destination marketing and projects to make the cities more appealing. Liverpool’s ABID introduced a £2 per room, per night charge in June 2025, while Manchester’s city centre charge is £1 per night, applied to hotels and serviced apartments with a rateable value of £75,000 or more.
Their core complaint is that the national proposal, as it stands, “has not given the industry a voice and are too vague,” instead burdening operators with “another layer of bureaucracy and taxation.” They warn of a “real risk” that a poorly planned national policy could undermine successful city-driven regeneration.
Competitiveness and the Visitor’s Choice
Beyond administrative burdens, the industry fears the tax will make England uncompetitive. The UK already imposes a 20% VAT rate on accommodation, one of the highest in Europe. The introduction of an Electronic Travel Authorisation (ETA) requirement for visa-exempt travellers from February 25, 2026, adds another cost barrier for international visitors.
Research suggests domestic tourism would also suffer. According to industry studies, 39% of UK residents would consider holidaying elsewhere if a £10 nightly tax were implemented, with 42% of families saying it would be a “big issue or very big issue” when travelling with children. For multi-site operators, the potential for a confusing patchwork of different levies across various mayoral areas presents a significant operational headache.
This opposition was crystallised last week when hotels and holiday companies across the country signed an open letter calling for the government to scrap the levy plans entirely.
Mayoral Ambition and the Devolution Drive
Despite the backlash, the policy has powerful supporters. Several mayors, including Andy Burnham in Greater Manchester and Sadiq Khan in London, have welcomed the prospect of visitor levies as a tool to invest in infrastructure and drive regional growth, arguing it would help English cities catch up with international counterparts and destinations elsewhere in the UK.
In Scotland, legislation has been passed allowing councils to introduce a levy, with Edinburgh set to implement a 5% tax in July 2026. Wales has also passed visitor levy legislation, with an earliest start date of April 2027.
Proponents point to the significant revenue potential. Research suggests a £2 per person, per night charge in York and North Yorkshire could raise up to £52 million annually, while a levy in the Liverpool city region could generate nearly £11 million a year.
UKHospitality, while opposed to the current mayoral-led model, has advocated for a fallback position of a nationally consistent flat-fee model, with revenues ring-fenced for the visitor economy and a minimum 12 months’ notice for businesses. The organisation has launched a national campaign, “Unlocking Britain’s Visitor Economy,” alongside Liverpool BID Company and Downtown in Business, to pressure the government for greater sector support.
As the government reviews the consultation responses, the central plea from the industry is for clarity and caution. “We cannot afford another u-turn,” the Liverpool and Manchester ABIDs stated. “We need solid and sound plans to be put in place before any decisions are made.” With reports of potential government reconsiderations on the policy, the sector is waiting to see if its warnings will be heeded.
