The UK government has formally confirmed that mayors and local leaders in England will be able to introduce an Overnight Visitor Levy, a move that adds another layer of cost to hotel stays and raises fresh questions about the competitiveness of British destinations. The proposal, announced on 10 September, is part of a wider devolution of fiscal powers from Westminster. Local authorities would decide whether to apply the levy, with revenue earmarked for transport, high streets, events and other infrastructure that supports the visitor economy.
For the travel trade, this is not just another line on a hotel bill. Accommodation providers, tour operators, booking platforms and travel management companies will need to incorporate the levy into pricing at a time when the sector is already grappling with rising operating costs and the relative affordability of UK destinations compared with European rivals.
Percentage-based model draws industry concern
The government has opted for a percentage-based levy rather than a flat nightly charge. The rationale is that visitors in budget accommodation pay less, while those in premium rooms contribute more. That approach has put room rates at the centre of the debate.
Luke Petherbridge, Director of Public Affairs at ABTA – The Travel Association, said the organisation believed overnight levies would “further damage the competitiveness of our tourism sector” and expressed disappointment that the government had decided to proceed. “The decision to pursue a percentage-based model, which has already been recognised to be problematic in Scotland, is especially concerning and should be reviewed. It is critical that mayors now engage with the sector before they take decisions on the local level,” he said.
ABTA also highlighted a key issue for destinations considering the charge: where the money goes. “While we don’t agree with this new tax, should mayors choose to introduce these levies, the money raised from visitors must be put back into improving the services they use and enhancing local tourism offerings,” Petherbridge added.
The wider hospitality industry has voiced similar concerns. UKHospitality cited Oxford Economics research estimating that a 5% levy could lead to 33,000 fewer jobs and reduce economic output by £2.2 billion by 2030.
Edinburgh provides an early test
England is entering a visitor levy landscape already taking shape elsewhere in Britain. Edinburgh’s levy took effect on 24 July 2026, charging 5% of the accommodation cost before VAT for the first five consecutive nights of a stay. The city council expects the scheme to generate up to £50 million annually, with revenue directed towards infrastructure, culture, heritage, events and destination management.
Wales has chosen a different route. Its discretionary visitor levy is based on fixed per-person, per-night charges rather than a percentage of the room price. Welsh Government guidance sets rates at 75p for adults staying in hostels and campsites and £1.30 for most other accommodation, where local authorities opt to introduce the levy.
Those differences matter commercially. Hotel groups and intermediaries operating across Britain could face multiple charging structures, requiring changes to booking systems, contracting, invoicing and the way final prices are displayed to leisure and corporate buyers. For example, a business traveller booking a room in Manchester might see a different levy calculation than one in Cardiff, complicating rate negotiations and expense reporting.
Local authorities, meanwhile, see visitor levies as a way of ensuring tourism helps fund the infrastructure on which it depends. The Local Government Association has argued that locally designed schemes could provide significant investment for visitor economies and that councils should retain a share of the revenue to support services used by tourists.
The next stage will shift much of the debate from Westminster to England’s destinations. Mayors considering a levy will have to decide not only how much visitors should pay, but whether the additional revenue can deliver improvements substantial enough to justify a higher cost of stay. For hotels, tour operators and destination marketers, that local decision-making will be closely watched. In a market where cities compete for conferences, international groups, weekend breaks and corporate travel, the levy may be locally imposed — but its commercial impact will extend well beyond the hotel reception desk.
As the industry adapts, some destinations are already looking at alternative ways to boost visitor value. For instance, Thailand is shifting its tourism metrics to focus on visitor value rather than sheer numbers, a model that could offer lessons for UK destinations seeking to balance revenue and experience. Meanwhile, the competitiveness concerns raised by the levy plan are likely to persist as more details emerge.
