Scottish Tourism Alliance Calls for Close Monitoring as Edinburgh Visitor Levy Comes into Effect
As Edinburgh’s visitor levy comes into effect on Friday (24 July), the Scottish Tourism Alliance (STA) has reiterated its concerns about the potential impact on Scotland’s tourism and hospitality industry at a time when businesses continue to face a mixed trading and economic environment.
The STA says the practical impact of the levy on visitor behaviour, demand and secondary spend MUST be closely monitored before other local authorities commit to introducing their own schemes.
Marc Crothall MBE, Chief Executive of the Scottish Tourism Alliance said: “Introducing a successful visitor levy scheme is about the right application, right place and right time, if it is to act as a force for good that enhances our visitor offering and appeal. At the moment, it is the view of the majority of those in the industry that I have spoken to that none of these conditions of success is currently in place, and the introduction of a further charge on those who choose to visit and stay in a destination risks more harm than good.
“One of the biggest concerns within the industry is around the impact on secondary visitor spend once people arrive which we hear without a levy in play is under pressure, particularly among families and groups. There’s great uncertainty around how visitors will respond and if it will affect demand by both domestic and international visitor be it for business and or leisure. Will it lead to some choosing not to stay over in Edinburgh or shorter stays, or will it result in people still coming but spending less in the destinations restaurants, pubs, shops, attractions and with other local businesses? These are impacts we’ll be monitoring over the coming weeks and months and we will be expecting authorities to do the same.
“A visitor levy has always threatened the Scotland’s price competitiveness and risks creating a tipping point that many visitors will be unwilling to pay, further impacting the declining domestic market.
“With one of the highest rates of VAT in Europe, Scotland is already one of the most expensive destinations to visit and with VAT charged on the levy, this effectively becomes a double tax, further inflating costs for consumers. Edinburgh specifically, even before the introduction of the levy was recently reported in Post Office Travel Money City Cost Barometer as being the third most expensive destination for a mid- range two night weekend break for two including meals, drinks, local transport and visitor attraction, Europe behind Oslo and Copenhagen.”
“With mounting financial pressure on local authorities which is fully appreciated and understood by the sector, aside from an expectation that all areas of expenditure by councils are looked at to improve efficiencies in their operating costs without their compromising service, we’ll also be looking at how this additional levy income will be invested, whether it’s used to genuinely enhance the visitor destination, or will disappear into funding routine core council services like waste collection. The legislation is clear that it must be treated as incremental spend and be used to enhance the visitor experience, it should be aligned to the destination’s visitor economy strategic aims and objectives.
“The cost of doing business remains the number one concern we hear from all tourism businesses across Scotland. Staff costs, food inflation, energy, insurance and business rates are all putting sustained pressure on margins, and for many businesses the challenge is no longer simply about revenue or occupancy. It is about whether they can make a reasonable return and retain enough to invest in their product and people
“While the summer months paint a picture of a booming tourism industry, the reality is that the trading picture is very mixed. International demand remains strong overall, but we’re hearing that some pre-contracted tour groups are smaller than in previous years and there are concerns around rising aviation costs, including the potential impact of sustainable aviation fuel requirements, and the effect that higher prices could ultimately have on customers.
“Domestic bookings are holding up reasonably well in many parts of Scotland, although not everywhere, and booking lead times have generally become shorter.
“Businesses understand the need for good regulation, but the cumulative impact means that there is a real risk that we undermine competitiveness and investment, and Scotland must remain competitive on both price and quality.
“Collection of the levy adds an even greater cost burden on accommodation businesses already stretched and at breaking point, with wider implications for the tourism and hospitality sector in local communities if a decline in visitors is experienced.
“For many businesses, autumn will be critical. We need a clear commitment to growth in the visitor economy, serious consideration of a reduced VAT rate for hospitality and tourism, particularly in light of Ireland’s move to 9%, and meaningful reform of the non-domestic rates system rather than continued discussion without delivery.
Scotland has many high quality outstanding tourism products, we are nation that is recognised for delivering world class events spanning live music, sport, festivals, we have some of the best heritage and landscapes to explore which have strong international appeal, but businesses need the conditions to invest in quality, innovate, employ people and compete on price That has to be a priority if we want the visitor economy to fulfil its potential, now, more so than ever, accepting the status quo and being complacent is not an option.”