Visitor levy causing 'major problems' for Edinburgh firms, body warns
Firms bearing ‘significant cost’ due to correction of bills, says tourism business organisation
Edinburgh’s controversial visitor levy is causing “major problems” for firms and requires a “real time” analysis to determine if it is curbing spending across the city, the leading body for tourism and hospitality businesses in Scotland has warned.
The Scottish Tourism Alliance (STA) said firms could be incurring millions of pounds worth of costs correcting bills due to the way in which the levy is calculated and associated problems with booking platforms.
It explained that staff are having to correct the individual bills of guests in order to remove non-accommodation charges, such as breakfasts, to arrive at a final amount from which the levy percentage is calculated.
The “complexity” and additional work required to amend the bills is taking around eight minutes in some cases, the STA said, and would result in a “significant cost” to tourism businesses.
The alliance has called on other local authorities looking to introduce their own levy to learn from the problems in Edinburgh, and said any such rollout should follow a fixed-fee model rather than a percentage charge.
Edinburgh became the first city in Scotland to introduce the so-called tourist tax when it was implemented last month. The levy sees visitors staying overnight in hotels, bed and breakfasts and self-catering accommodation, charged an additional five per cent on top of their original booking cost.
Reports have suggested the levy has generated £5 million in revenue in its first month of operation, but a City of Edinburgh Council spokeswoman said it will not receive any levy funds until the first returns are due from 1 October. The levy is expected to raise around £45m to £50m a year by 2028/29, with the money being reinvested directly into initiatives that benefit residents and enhance visitor experiences.
After administration and contingency costs, a fixed amount will be assigned to different areas, including £5m annually for housing and tourism mitigation, and money for the likes of participatory budgeting, culture, heritage and events, and city operations and infrastructure.
But already the STA said it had been contacted by accommodation providers who have reported problems implementing the percentage model and, in particular, how the levy is being handled by some booking platforms.
Marc Crothall, the STA’s 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.”
He added: “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 two per cent 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.”
Earlier this week, Highland Council agreed to proceed with a public consultation on a tiered fixed amount visitor levy scheme. As part of its proposals, a £5 per room, per night visitor charge could be brought in for stays in hotels, B&Bs and short-term lets, with a £2 per night charge for hostels and campsites.
Accommodation providers would retain five per cent of the levy collected to help cover administration costs, a step that the STA has welcomed.
“The fixed-fee approach is what we have been advocating and what we pushed for when the legislation was changed,” Mr Crothall explained. “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?”
The STA also wants the emerging impact of the Edinburgh levy on wider visitor spending to be measured.
Mr 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 City of Edinburgh Council leader, Jane Meagher, said the levy had been “many years in the making,” with the council listening to and taking into account the views of residents, industry, and other stakeholders.
“In surveys we undertook pre-legislation, we asked whether preference would be for a flat-rate, or a percentage-based fee, and the majority of respondents had a preference for a percentage fee as this was seen as the fairer option meaning visitors could pay a levy in proportion to their accommodation costs,” she said.
“We’re in ongoing and active dialogue with accommodation providers as we have been throughout. We want to hear their views one month into the visitor levy being introduced and are committed to addressing concerns. We are the first local authority in the UK to introduce a levy on overnight stays and naturally there will be lessons we can learn.”
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