Business leaders and hospitality associations in the UK’s largest cities have written an open letter to the Treasury and DCMS after England’s Metro Mayors made a bid for “tourist tax” powers.
Led by Manchester and Liverpool, the two cities with operating overnight visitor levies, the signatories of the open letter represent the Business Improvement Districts and business communities in Liverpool City Region, Greater Manchester, London, the West Midlands.
The letter questions the threat to existing models of visitor levies currently in place in two English cities. Both Manchester and Liverpool have operating visitor levies of £2 and £1 overnight for guests staying in city hotels. They are managed and administered through well-established Accommodation BIDS (ABIDS) representing the city’s hotel and serviced accommodation industries.
Please find the open letter below:
Dear Chancellor and Secretary of State
Re. Visitor Levy
We are writing in response to the open letter sent by the Metro Mayors of Liverpool City Region, West Yorkshire, Greater Manchester, London, the North East and West Midlands calling for a tourist tax to be introduced in their regions.
We represent the Business Improvement Districts and business communities of these key areas. We come together with a shared and purposeful voice with a need to raise key and critical issues here that could pose a serious threat to the health, vibrancy and economic stability of our major cities and specifically the fragile hospitality industry.
The Metro Mayors’ letter states that “at present, legislation does not permit the introduction of a tourist tax in England”.
This may be true, but there are two English cities with successful visitor levies in place; Liverpool and Manchester. Both visitor levies are in place through well-established Accommodation BIDS (ABIDS). Visitor levies are not a tourist tax. A tax can only be implemented by a local government or central government. The overnight visitor levies are instead administered by the hotels who have, collectively, put individual systems in place to manage the collection. They are invested into a pot with a clear and transparent business plan that has been voted for.
These ABIDS, as with each and every business improvement district in England, are defined and operated within UK government legislation. They are voted for by business, democratically enacted with at least a 50% vote in favour to be put in place; far more than the mandate often in place for regional mayors. They are both private and not for profit entities, representing an industry that is a part of a hospitality sector that generated £54bn in tax receipts in 2022. They work in partnership and are entirely committed to the success of their local economies.
The Metro Mayors state that there is “currently no dedicated income stream to reinvest in the tourism sector’s long term growth”. Yet, the two ABIDS currently generate over £6m a year for the two cities. These funds are entirely focused on supporting the visitor economy in city centres and dedicated to developing tourism offers. Both ABIDs attract visitor numbers in their tens of millions annually and bring hundreds of millions to their city in total economic impact.
Despite the Metro Mayors’ insistence that “this kind of revenue should be publicly controlled and democratically accountable”, the revenue generated by the current visitor levies is managed and administered by independent, industry-led boards. A transparent and democratic process implements a BID, and the administration after implementation is equally rigorous. Comprehensive oversight and scrutiny is a vital component of BIDs. What the Mayors mean is that it should be privately raised, but publicly spent.
Hoteliers involved in the BID process are empowered to direct it at areas of importance. It is deeply democratic. If the BID does not generate a return it can be voted out, as defined by its fixed term periods of delivery. There is no such measure for the Mayoral route. Once it is in place there is no say on stopping it. Indeed a Mayoral precept seems only to move in one direction: Up.
It is, crucially, a model that works and is effectively supporting city centre economies. It has a proven track record of converting visitor levy into subvention funds into growth. In Manchester, £9m has been invested in city centre operations and tourism, including £3m in bringing events like the MTV awards and the Brits. In Liverpool, the subvention fund from the ABID has supported 43 events and conferences, with 25 of these scheduled to take place over the next 36 months. £1.3m has been contributed from ABID support in the city, with £87m worth of economic impact expected from that visitor spend.
The role that the private sector plays in cities and towns is critical. It is the hotel industry that has led on the implementation of the visitor levy, and that continues to push for it. It comes as a result of their understanding and experience of their economy and its viability. This isn’t to increase turnover; it is to increase spend locally.
The Metro Mayors talk of a need to plan, of “leveraging predicted revenue” and of “ring fenced” revenue to support local and regional investment plans. The fear within the industry that is relayed to us by our levy payers is based on a decade and a half of broken promises. There has been a 15-year gap in local government funding. The private sector should not be used to plug that hole with increased taxation applied to them. This is an industry committed to the long-term resilience and growth of their local economies, but it is one beleaguered by high energy costs, an antiquated rates system, increased staff costs and a sustained absence of local strategy for survival. It is an industry that is promised a say, but is repeatedly asked to pay more, to do more and to see decisions made locally, regionally and nationally that do not work for the visitor economy.
The ABID is now a proven working model. It is a specific model that focuses on driving forward a sustainable visitor economy and fundamentally increasing visits, not dissuading them, as exemplified by the tourist taxes in Venice, Amsterdam and Lisbon.
The success in Manchester and Liverpool has meant that other cities within the UK are currently examining and preparing this mechanism to implement a visitor levy.
In Scotland, Edinburgh’s visitor levy, which comes into force in 2026, has been enacted by government legislation. This one model implemented by the local government has alienated the private sector and hotels, it has led to confusion as the promises of investment have changed. Despite promised investment in the visitor economy, the direction and funding shifts with political winds. The vague legislation has meant hoteliers will generate huge amounts for a city but have no say in investment. “Ring fenced funding” can utilise a lack of clear definition to say that anything can serve a visitor economy, whether it does or not.
Meanwhile in Wales similar legislation is progressing and the Senedd’s own Finance Committee has called for greater transparency and business involvement in deciding how the money collected is spent. There are other models that can support infrastructure, like Property BIDs, that have not been trialed outside of London.
While there is support within the hotel industry for a visitor levy under the current successful model, there is little support for it as a politically-led project. It threatens that a private sector-led initiative will be undermined by another tax system that creates further division between the public and private sector.
It risks unpicking all of the good work done by the private sector in building a flourishing and thriving visitor economy among some of our hardest hit communities, and we would appeal to government to not introduce these powers without detailed consultation with the sector and consideration of the likely negative impact of any new powers.
We look forward to working with you on further consultation to demonstrate the success of this private sector-led initiative,
Best Wishes,
Bill Addy, CEO Liverpool BID Company
Vaughan Allen, CEO Manchester City Centre Business Improvement District
Dee Corsi, New West End Company
Steven Medway, Knightsbridge Partnership Marcus Magee Liverpool Hospitality Association
Matt Townley, Manchester Hoteliers Association
Joanne Grey, Birmingham Hospitality Association
Steven Hesketh, Chester Hospitality Association
