Cornwall hoteliers hit out at plans for ‘game-changing’ tourist tax 

Absorbed pricing

Veryan Palmer, hotel director at the Headland in Newquay, is among those who believe a visitor charge is not suited a destination such as Cornwall. She said: “Cornwall is a rural region, not a major city. We have a very seasonal economy and in winter rates drop and the majority of businesses trade at a loss. It seems absurd to consider adding an additional charge. If businesses thought they could charge an extra 5%, they would already be doing so.”

With Cornwall competing with European locations for summer trade, Palmer said a levy would put the region at a disadvantage, particularly as rates and taxes must be absorbed into advertised prices in the UK. This would be further exacerbated by the lower rates of VAT charged on the continent.

She added that different locations within the UK could end up competing for visitors if local authorities are free to set their own levies, while also hitting the local tourism upon which operators depend during the winter months by taking rates out of the reach of some consumers. 

Mike Warren, chief executive of Harbour Hotels, which has three hotels in Cornwall, is opposed to the introduction of any visitor tax, and said it would impact competition. He said: “[We] disagree entirely with the proponents of it, who frequently refer to European countries and cities who do have a form of visitor tax.”

Warren argued the comparison is irrelevant as “the level of VAT, excise duty and government-imposed employment costs in Europe are significantly less than in the UK”.

Warren added that Burnham should instead focus on improving the overall trading environment for hospitality: “The prime minister should take his opportunity now to positively impact the trading environment the UK hospitality industry is operating in and address as a priority the complex and inequitable business rates, and the threat of additional employment regulation and bureaucracy that we face. 

“He should focus on these larger issues. Doing so will encourage more employment in the industry, particularly of younger people.”

Kate Nicholls, chair of UKHospitality, has echoed the concerns of operators and in February called for the government to rethink. She said: “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.”

Lessons from Edinburgh and Manchester

Manchester and Edinburgh have both implemented visitor charges in their respective cities, but under very different models.

In Manchester, the charge, which amounts to £1 per room, per night, was implemented by the Accommodation Business Improvement District (ABID), rather than the local authority. Funds raised are pooled and put towards the hosting of major events, marketing campaigns and other initiatives to boost the industry. The events attracted in part due to the efforts of the ABID, supported by the charge, include the Brit Awards and the MOBO Awards.

Adrian Ellis was chair of the Manchester Hoteliers’ Association between 2016 and 2024, when the charge was introduced. He said: “[The charge] was created to bring concerts, new sporting events and tourism [to the city] and to make the city a more attractive destination for tourism. All the money raised – which is quite substantial – goes into a fund to help the hoteliers in the city. Burnham and his colleagues were supportive, which ultimately meant that we as hoteliers benefited from, and are still benefiting from, the programme.”

In Edinburgh a 5% levy on the original booking cost is charged, limited to five nights. The tax is collected by accommodation providers and passed to the local authority.

Louise MacLean, business development director for Edinburgh-based hospitality company Signature, said: “The Edinburgh tourist tax appears flawed so far, with statutory guidance and local council regulations giving different messages. While that will hopefully improve in the coming weeks, the main takeaway to the local bodies is, ‘listen’.  Listen to the experts, the trade bodies, the hoteliers and learn best practice from those operating in the sector every day.

“The question we are being asked by visitors and locals is ‘what is it all being spent on?’. Right now, we can’t answer that and that is an issue. Customers and operators seek transparency and there’s precious little of that right now.”