UKH warns tourist tax is ‘wrong policy at worst time’

UK Hospitality has pushed back against the government’s consultation on proposals to give mayors and possibly other local leaders the ability to introduce overnight visitor levies in England, raising concerns about the timing and impact of the plans.

The trade organisation said the hospitality industry is already struggling against rising employment costs and business rates following the 2026 revaluation, with some accommodation providers seeing their relatable values increase almost twofold. It added that these conditions leave businesses with little room to absorb new costs without harming growth and investment.

It also warned that a levy would make holidays more expensive as households continue to face cost‑of‑living pressures, as well as hit business and events travel by increasing costs for employers and risking reduced demand for conference, exhibitions and businesses. 

UK Hospitality said that added charges to the high VAT rates the UK already pays in accommodation could dwindle the sector’s international competitiveness and move people, especially families and young people, away from domestic trips.

The trade body also warned that the power of mayors to make decisions could create a “confusing patchwork” of rules across the country and raise higher compliance costs for multi‑site operators. 

UKHospitality said the proposal fails crucial principles of accountability and transparency and added any levy must follow a nationally consistent flat‑fee model with rates tiered by price, with revenues ring-fenced for the visitor economy, at least 12 months’ notice for businesses and support to cover compliance costs.

This news comes after leading hospitality and leisure CEOs last week wrote a letter to the chancellor calling on the government to ditch plans for the tourist tax.

The 200 signatories include Butlin’s, Haven, Hilton, IHG Hotels and Resorts, Merlin Entertainments, Parkdean Resorts, Travelodge and Whitbread, who warn that the proposed visitor levy will “hit families hardest, put jobs at risk and drain money from local businesses and communities”.

Kate Nicholls, chair at UKHospitality, said: “This is the wrong policy at the worst possible time. Accommodation businesses are already battling enormous cost increases and declining confidence. Adding a new tax on to family holidays, business travel and international tourism will strangle growth, reduce investment and put jobs at risk.

“A tourist tax will make England less competitive internationally and hit the very visitors the Government says it wants to attract. While we urge Government to rethink this policy entirely, if it does go ahead, it must be designed in the least damaging way, with national consistency, a simple flat‑fee model, and receipts used for the benefit of hospitality and tourism, alongside genuine involvement from the businesses expected to deliver it.”