‘Overnight stay tax could hit visitor numbers’

A proposed law enabling English regions to impose a tax on overnight stays could put some areas of the North West at a disadvantage and threaten visitor numbers, according to a regional tourism finance expert.

The Overnight Visitor Levy, proposed in this month’s King’s Speech, would give some mayoral authorities the means to apply charges to overnight accommodation stays to help fund local services.

However, Colin Johnson, partner at Lancashire accountancy and advisory firm MHA, says the diverse nature of the North West’s visitor economy, which includes national parks, seaside resorts, major cities and rural communities, means some regions could be left at a competitive disadvantage.

Colin, who advises leisure and tourism across the region, said: “The proposed levy would actually be a devolved power and is likely to only apply initially to areas that are part of a mayoral authority, which straight away will create regional inconsistency.

“We don’t yet know whether the tax will be a percentage of the accommodation price or a flat per-night charge regardless of price point.

“The latter model could create a disproportionate impact on lower cost operators and travellers on tight budgets.

“Price sensitive sectors like caravan parks, holiday parks and short term lets could therefore be at greater risk of losing bookings.”

Explaining how the tax might affect different areas of the North West, Colin added: “It could impact certain areas of Cumbria and seaside resorts like Blackpool, should it be introduced in there in the future as these regions move towards becoming mayoral authorities. 

“For people with the means to book a two or three night stay in a luxury hotel in the Lakes, a few extra pounds each night probably won’t make much difference, but for families and visitors where there is higher sensitivity to pricing, there’s definitely a risk of impact on visitor volumes.”

While Colin believes the tax is being introduced for valid reasons, he says it could hamper the leisure sector’s ability to encourage and maintain a ‘staycation’ trend in the years ahead.

He added: “The UK could benefit from a staycation effect this summer because of concerns over the cost of living linked to tensions in the Middle East. The last thing we should be doing is creating barriers to entry for people holidaying in the UK.

“Of course, overtourism is a concern, and there should be some provision for local authorities to generate the extra revenue needed to meet the strain put on local services or address local cost of living impacts. 

“Tourism taxes are already well-established in overseas markets like Greece and Spain, but except for certain parts of the Lakes, I just don’t see overtourism being a major issue in the North West.

“Of course, the final structure of the proposed tax has yet to be confirmed, and we’ll get more detail in the months ahead, but the conversations we’ve been having with tourism operators suggest that the sector is broadly unsupportive of the proposed levy. There are real concerns around the cost, administration and fairness of such a tax.”