Plans to give local leaders the power to impose a new tax on overnight stays have prompted warnings over the potential impact on Isle of Wight tourism, with MP Joe Robertson, Daish’s Holidays and the Country Land and Business Association raising concerns about additional costs for visitors and businesses.
The Government has confirmed plans for an Overnight Visitor Levy in England, which would allow Mayors and other eligible local leaders to introduce a percentage-based charge on paid overnight accommodation.
Under the proposals, the levy would not automatically apply across England; instead, Local leaders would be given the power to decide whether introducing one was appropriate for their area, following consultation.
The rate would be calculated as a percentage of the cost of accommodation, meaning guests staying at cheaper hotels and guesthouses would pay less than those booking more expensive accommodation.
Revenue raised could then be invested locally, including in infrastructure, the visitor economy and other local priorities.
For the Isle of Wight, however, concerns are being raised about whether making overnight stays more expensive could discourage visitors and reduce spending elsewhere in the Island economy.
Isle of Wight East MP Joe Robertson challenged the Government over the proposals in Parliament, arguing that growth should come from attracting more visitors rather than taxing those already choosing to stay.
Joe Robertson MP has said:
“Tourism growth requires an increase in visitor numbers so that more money is spent on the high street, not a new tax.
“Oxford Economics says the cost of the overnight visitor levy will be around £1.8billion in reduced spending and a decrease in tax receipts, not an increase.”
Mr Robertson asked the Government to confirm whether its visitor economy growth strategy would consider what he described as the harm caused by the new tourism tax, as well as when the strategy would be published.
Opposition has also come from Daish’s Holidays, which operates Daish’s Hotel on the Isle of Wight as part of a portfolio of 11 hotels in England and Wales.
The family-owned coach holiday company transports guests from pick-up points around the UK, with customers also able to travel independently.
Paul Harper, Commercial Director at Daish’s Holidays, has said:
“Daish’s Holidays, which owns and operates 11 coastal hotels in destinations including Bournemouth, Torquay, Newquay and Eastbourne, opposes plans to give mayors in England the power to introduce a tourist levy.
“While we understand the pressure on local services, adding another tax on customers during a cost-of-living squeeze is not supportable and risks undermining the Chancellor’s ambition for ‘growth in every postcode’.
“UKHospitality analysis suggests that even a 5 per cent levy could cost the UK economy up to £2bn in GDP, putting more than 30,000 hospitality jobs at risk and coastal communities, including those where our hotels are based, will likely feel the impact most.
“Even if Parliament grants these powers, further local decisions would be required before any levy could be introduced. The priority should be making UK holidays more affordable and supporting the coastal economies that depend on tourism, not adding further costs at the point of booking.”
The potential impact extends beyond hotels, with rural tourism businesses also among those concerned about visitors facing another charge.
Gavin Lane, President of the Country Land and Business Association (CLA), has said:
“A tourism levy sends the wrong signal entirely at a time when many rural businesses are already under significant financial pressure.
“Business taxes seem as incoherent as they have ever been. Increasing taxes via a visitor levy while at the same time reducing VAT on visitor attractions and business rates for pubs and clubs seems very poorly thought through and confusing.
“The profit warnings from Greggs and Wetherspoons demonstrate that UK retail and hospitality is grappling with significant cost pressures, including 20% VAT, business rates and rising labour costs. This is compounded in rural areas with poor transport links, weak digital connectivity and restrictive planning rules.
“Rather than introducing new costs for visitors and businesses, policymakers should focus on creating the conditions for this vital sector to thrive.”
The Government argues that the measure would instead give local areas a new way of raising money from their visitor economies and investing it back into the places tourists come to see.
It says England currently has few local mechanisms through which destinations can raise money to maintain and improve infrastructure supporting tourism.
While supporters of the policy argue that visitors could contribute towards the infrastructure and services they use, opponents fear an additional charge could make destinations such as the Isle of Wight less attractive to cost-conscious holidaymakers and leave them with less money to spend during their stay.
Mayors will be able to set out their spending plans by March 2028.
