Labour under fire over proposed hotel tax as hospitality sector braced for impact

Luxury hotelier Sir Rocco Forte has publicly criticised Labour’s emerging plans to introduce a Venice style tourism tax across England warning of potentially damaging consequences for the hospitality sector. The owner of the Balmoral Hotel in Edinburgh and Browns in London described the move as deeply unfair and questioned the rationale of imposing a new levy on visitors at a time when the sector continues to struggle with high costs.

The Chancellor is reportedly preparing to grant mayors in England the authority to charge tourists for overnight stays aligning these powers with measures seen in Scotland and Wales where such taxes have begun to appear. The government’s intention is to provide local authorities with additional revenue for investment in transport and public services. City leaders including Sadiq Khan in London and Andy Burnham in Greater Manchester have been prominent advocates for the visitor levy.

Economic analysis indicates that a national hotel tax set at one pound per person per night could generate over 400 million pounds annually. Both domestic and international tourists would be subject to the charge. However, industry leaders caution that introducing further costs risks deterring price sensitive visitors especially given current perceptions of the UK as an expensive destination in global comparisons.

Sir Rocco Forte emphasised that visitors already pay Value Added Tax on accommodation and argued the new levy would disincentivise travel to the UK. Hospitality representatives echoed concerns about the proposed tax likening it to an additional increase in VAT for the industry. Kate Nicholls chief executive of UKHospitality highlighted the pressures currently facing hospitality businesses who are working to maintain competitive pricing amidst broader economic uncertainty.

Recent reports suggest that the Chancellor has shifted position having previously opposed such a measure. The government is said to have been influenced by evidence from major European cities such as Paris Barcelona and Venice which have established similar tourism taxes. This shift has sparked questions from sector leaders who point to the removal of VAT free shopping for overseas visitors as a previous blow to the tourism economy. By contrast travellers to the European Union can still take advantage of tax free shopping a disparity viewed as a key factor in attracting high spending tourists away from the UK.

A Treasury spokesperson declined to comment directly on speculation around the Budget. Official statements emphasised the government’s focus on fiscal discipline and prioritising investment in public services. As the Budget approaches the hospitality industry will be watching closely for any official confirmation of a new tourism tax and preparing to assess its broader effects on both visitor numbers and associated spending.