More than 200 hospitality and leisure leaders have called on the government to abandon plans to allow local authorities in England to introduce a tourist tax on accommodation.

Under proposals currently being considered, mayors and local leaders could introduce a modest “visitor levy” on overnight stays to generate funding for local infrastructure and tourism initiatives. However, major operators including Butlin’s, Hilton, Travelodge and the owner of Alton Towers have warned the measure could deter domestic travel and harm local businesses.

In a letter to Chancellor Rachel Reeves, the group argued that a £2 per person, per night charge could add more than £100 to the cost of a two-week family holiday. They warned this could encourage families to shorten trips, cancel plans or travel abroad instead.

While the government has suggested any levy would likely be calculated as a proportion of accommodation costs rather than a flat fee, industry representatives say the UK already has a high tax burden on the sector.

Similar visitor levies already exist elsewhere in the UK. Local authorities in Scotland and Wales have the legal power to introduce such taxes, with several Scottish cities planning to implement them this year. In England, voluntary schemes have been introduced in cities such as Manchester and Liverpool through business improvement districts, with Manchester’s £1 per room charge raising £2.8 million in its first year.

The government says giving local leaders the option to introduce a levy could support regional growth by funding projects that improve destinations for both residents and visitors. However, critics argue that additional charges risk placing further strain on the tourism and hospitality sector while increasing costs for travellers.

Allen Simpson, Chief Executive of UKHospitality, said: 

“The numbers are clear. A holiday tax would hike costs for Brits, make staycations more expensive and decimate tourism.

"There are no winners from a holiday tax. From coastal communities and city centres to local guesthouses, pubs and taxi firms, the impacts are stark and indiscriminate.

"Taxes up, jobs lost and our high streets hit once again.

“Holidays are for relaxing, not taxing. The Government should keep it that way and stop the holiday tax.”

Simon Palethorpe, CEO of Haven, said:

“Holidaying in the UK creates jobs, drives investment and boosts local businesses. A holiday tax will mean people take fewer UK holidays resulting in less investment and fewer jobs, often in areas where there are few alternative employment opportunities. “In the UK, visitors are already paying double the VAT rate of the most popular overseas holiday hotspots. The UK is a great place to visit and we should be encouraging people to do so, not adding extra taxes.”

Simon Vincent CBE, President, Europe, Middle East and Africa, Hilton:

“The Oxford Economics research is clear that a proposed holiday tax, on top of already high VAT, will impact British families staying in the UK and make the country less competitive as a destination.“Tourism thrives when government and industry work together. The focus should be on growing visitor numbers and enabling hospitality to play its full role in supporting jobs, investment, and economic growth.”

Fiona Eastwood, Chief Executive Officer of Merlin Entertainments, and a Board Member of UKHospitality, added:

“A holiday tax increases the cost of short breaks for working families, making them unaffordable for many. Businesses in our sector will suffer; so will the regional economies we support by attracting overnight stays and tourism.“At Merlin we’re proud of what we offer to families in the UK, but to continue to invest here, we need the economics to stack up.”