Hotel owners face juggling multiple Overnight Visitor Levy rates
Hotel owners face juggling multiple Overnight Visitor Levies, as each English mayor could charge a different rate, say leading audit, tax and business advisory firm, Blick Rothenberg.
Darsh Shah, a partner at the firm, said: “If the Overnight Visitor Levy Bill passes, each English mayor would be able to choose the levy rate they charge hotels in their jurisdiction – or not to charge the levy at all. Making the management of already stretched hotel finances even harder.”
He added: “This will be especially challenging for hospitality businesses that own multiple hotels, as they may have to budget for several different levy rates at once. Mayors can even choose to set a levy in some areas of their local authority but not others, or create an exemption area, provided they have consent from that authority.”
Darsh said: “Hotels will have to pass the cost of the levy onto guests. For low-income holiday makers, even a small price increase could be the difference between them holidaying in an area, or going elsewhere. Alternately, they may choose to go to a resort, as resorts will not have to pay the levy. This could make certain areas unprofitable for the hospitality sector, scuppering hotel expansion and investment plans.”
He added: “The income raised from this ‘tourist tax’ is intended to be utilised for transport and public infrastructure, to enable cities to bid and host major events and festivals and promote local areas and preserve historic landmarks. This could potentially be beneficial for hospitality businesses as it would attract more visitors to that area – but this is not legally binding, and mayors could instead choose to use the money to prop up deficits in social care or SEN budgets.”
Darsh said: “Hospitality businesses are being battered by rising business rates, National Insurance Contributions and National Minimum Wage. If the Overnight Visitor Levy is going to be introduced, they should get a say in how the money is to be spent and how much they are charged. Currently, mayors would have to undertake a formal public consultation before implementing levies, but they are not bound to follow the results of them. An allocated proportion of funds raised from levies could be set aside for hospitality training, retraining and apprenticeships.”
He added: “The mayors who want to implement an overnight visitor levy include the mayor of London, Sadiq Khan; the former mayor of Greater Manchester, Andy Burnham, and the mayor of North East England, Kim McGuinness. The mayor of Tees Valley, Ben Houchen; the mayor of Greater Lincolnshire, Andrea Jenkyns, and the mayor of Copeland in Cumbria, Mike Starkie, oppose this tax being introduced.”