The Scottish Tourism Alliance (STA) has called on councils in Scotland to learn from the problems it says are being experienced by businesses in Edinburgh following the introduction of a visitor levy.
Edinburgh became the first Scottish local authority to impose a levy on 24 July. It is 5% of the cost of accommodation.
But STA said providers are reporting issues implementing the charge because the rules require the removal of all non-accommodation elements like breakfast charges from the final amount that the levy percentage is calculated from.
This is adding additional work and complexity, the industry body claimed, with staff having to correct guest bills when the levy has not been calculated accurately on booking platforms. Some have estimated that each correction is taking around eight minutes.
The STA said a fixed fee model would be easier for businesses to administer and clearer for visitors.
Marc Crothall MBE, STA chief executive, said:
“We always knew there would be challenges with the percentage model and we are now starting to see some of those coming through. Calculating a percentage may seem simple, but the reality is causing major problems for businesses.
“Some of the booking platforms are not yet set up to work with the percentage model properly and accurately remove non-accommodation elements from the final levy calculation, and that means businesses are having to go back and correct bills. That takes time, and it costs money.
“When you multiply that across the number of bookings being made in Edinburgh, it becomes a significant cost. This could run into millions of pounds, so we need to understand the true cost and whether the 2% businesses can retain for administration comes anywhere close to covering it.
“The last thing we want is for a guest to get to the end of their stay and be presented with a bill which isn’t accurate. It doesn’t reflect well on the business, and it doesn’t reflect well on Scotland as a visitor destination.”
STA said it welcomed Highland Council’s decision to introduced a fixed-fee model.
The current proposal is for a £5 nightly charge for most accommodation, with a £2 charge for campsites and hostels. Accommodation providers would be able to retain 5% of the levy raised to help cover the cost of administering it.
Crothall added:
“The fixed-fee approach is what we have been advocating and what we pushed for when the legislation was changed. It is simpler and, importantly, we know the booking platforms can accommodate it.
“But there is still a big question around what that fee should actually be. How do we know £5 is the right figure? Could it be £3? What impact will it have on bookings and jobs?
“That is why the economic impact assessment is so important and has to be done before a council agrees what level of fee, if any, can be introduced without causing more harm than good.”
STA also called for the emerging impact of the Edinburgh levy on wider visitor spending to be measured. Crothall added:
“We need to know what happens to the rest of a visitor’s spend when they are paying the levy. Are they spending less when they go out for dinner? Are they spending less in shops and attractions? Are they shortening their stay? Are they booking fewer Fringe shows? We need real-time information to get a true picture of whether the money raised from a visitor levy outweighs the negative impact on the wider visitor economy.
“The levy is here in Edinburgh, and it needs to work. What we are saying to other councils is: look at what is happening there, listen to the industry, carry out a detailed economic impact assessment and work with us to get the implementation right.”
Tourist tax in England
Visitor levies, or so-called tourist tax, are also in place in Manchester and Liverpool.
Keir Starmer’s government proposed giving all regional mayors in England the power to impose a levy and during a recent visit to Cornwall, Andy Burnham said a charge could be a “major game-changer” for the region.
But UK Hospitality has warned that multiple levies would lead to could lead to 33,000 lost jobs and a £1.8 billion reduction in tourism spending.
Allen Simpson, chief executive of UKHospitality, said:
“The numbers are clear. A holiday tax would hike costs for Brits, make staycations more expensive and decimate tourism.
“There are no winners from a holiday tax. From coastal communities and city centres to local guesthouses, pubs and taxi firms, the impacts are stark and indiscriminate.
“Taxes up, jobs lost and our high streets hit once again. Holidays are for relaxing, not taxing. The government should keep it that way and stop the holiday tax.”