The Overnight Visitor Levy Bill was announced in the King’s Speech yesterday, despite hotel owners and others in the sector hitting out at the proposals.
Plans include giving local authorities the power to charge a small fee for overnight stays in the form of a tourism tax.
It would apply to visitors staying at hotels, holiday lets, bed and breakfasts, as well as guesthouses.
The surcharge is expected to be five per cent of accommodation costs, and will go towards funding local infrastructure and tourism.
But British hotel owners are far from happy.
Hugh and Steve Ridgway, co-owners of the St Moritz Hotel and Cowshed Spa in Cornwall, condemned the tax as ‘English economic self-harm’.
The pair argue it demonstrates a misunderstanding of how the tourism economy actually works.
Hugh Ridgway says, ‘Cornwall is the jewel in the crown of English tourism. People travel from across the world to stay here, eat here, spend here and support thousands of local jobs and businesses.’
Hugh and Steve Ridgway, co-owners of the St Moritz Hotel and Cowshed Spa in Cornwall condemned the tax as ‘English economic self-harm’
He emphasises how those in the Cornish hospitality sector are ‘working almost to breaking point just to make budget and break even’.
‘Margins are wafer thin, staff costs are soaring, energy remains volatile, and consumer confidence is fragile,’ the hotel owner says. ‘And now Westminster thinks the answer is to tax visitors even more.’
Ridgway describes the move as ‘the stuff of tourism economics of the madhouse’.
He adds, ‘My only hope is that because we don’t have a “regional mayor” that it technically won’t apply. But who knows?
‘We are already, in effect, unpaid tax collectors on behalf of the Government. We collect PAYE, National Insurance, Corporation Tax and VAT and we pay Business Rates, Council Tax and pensions and endless regulatory costs. All whilst simultaneously trying to remain internationally and locally competitive.
‘Now, this economically illiterate Chancellor wants hotels and accommodation providers to become the front line for another politically convenient tax grab.’
New polling reveals one in five Brits would choose not to book a holiday in England if it were introduced.
Commenting after the King’s Speech, Shadow chancellor Sir Mel Stride said that the new family holiday tax will be ‘a blow for seaside towns and hit families in the pocket’ – and that the Conservatives would oppose the new tax when Labour bring it to Parliament in the next parliamentary session.
The pair are co-owners of the St Moritz Hotel and Cowshed Spa in Cornwall, pictured
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All the destinations – including those in the UK – where tourists have to pay a tax
Meanwhile Steve Ridgway, who is former CEO of Virgin Atlantic and previous Chair of Visit Britain, explains how he feels the government is ‘making what should be sustainable domestic tourism more expensive and less competitive’.
UKHospitality has warned the tax will cost 33,000 jobs and reduce tourism spending by £1.8billion nationally.
The pair say there has been wide opposition against the policy across the industry.
Hugh Ridgway says the ‘Government should be backing British tourism, reducing barriers to growth and recognising hospitality as one of the country’s most important employers’.
Small business owners in Cornwall previously said the holiday tax – which could add £100 onto a two-week family stay – is likely to be absorbed by owners, who won’t want to pass on the charge to customers already struggling to afford getaways.
Over in Devon, Giles Fuchs, CEO of Burgh Island Hotel, also believes the tax would be detrimental to the tourism sector and describes it as ‘deeply worrying’.
‘Hotels have shown incredible resilience over the past few years, continuing to invest in jobs, tourism and local communities despite mounting economic pressures,’ he says.
‘However, the introduction of a tourist tax is deeply worrying.’
The hotel boss emphasises how the industry has had to battle ‘rising energy costs linked to the Iran War and wider instability in the Middle East’ as well as ‘increasing business rates and higher staffing and supply costs, hotels are being hit from every angle’.
Fuchs adds, ‘At times, it feels as though the hospitality industry has become Westminster’s pin cushion.’
Burgh Island Hotel featured in BBC drama Towards Zero and was the location of a number of Agatha Christie books and film adaptations.
‘Hospitality remains one of the UK’s most important industries, supporting millions of jobs and driving growth across regional economies,’ Fuchs continues.
A whopping 64 per cent of hospitality businesses expect to cut jobs as a result of rising costs, according to Fuchs.
Giles Fuchs, CEO of Burgh Island Hotel in Devon, also believes the tax would be detrimental to the tourism sector and describes it as ‘deeply worrying’
‘Adding another charge for overnight stays risks making UK holidays more expensive and creating yet another obstacle for businesses that are vital to local jobs, suppliers and regional tourism,’ he says.
‘This is particularly concerning for areas like Devon and Cornwall, where tourism is the backbone of many local economies.’
Despite being one of England’s most visited regions – blessed with beautiful beaches, tropical gardens and major attractions including the Eden Project – Cornwall has seen its lucrative tourism industry suffer since lockdown.
In the autumn, the official tourist board, Visit Cornwall, entered voluntary liquidation, saying it faced ‘insurmountable financial problems’ – and visitor numbers slumped by 12 per cent in 2024 before rising slightly last year.
Skyrocketing rates, which began in Chancellor Rachel Reeves’s October budget, have left many small businesses in the industry on the brink, with the holiday tax potentially the ‘nail in the coffin’ for those whose livelihoods depend on the busy summer season.
Labour increased the national living wage for those aged 21 and over to £12.71 an hour this month – a 4.1 per cent rise, with rises in the minimum wage, national insurance contributions and the introduction of pension auto-enrolment leaving many Cornish business owners in fear of insolvency.
Vanessa Clark, 52, who runs a restaurant, Indidog, in Falmouth said the tourist tax, which could be introduced next year, will put small companies trying to stay afloat in the aftermath of the rate hikes backed into a corner.
She told the Daily Mail: ‘It’s disgraceful. They’re [the Government] expecting accommodation providers to collect that tax but it will end up being absorbed by them.’
Small business owners in Cornwall previously said the holiday tax is likely to be absorbed by owners, who won’t want to pass on the charge to customers already struggling to afford getaways
Clark said hotels and B&Bs desperate for tourists, who are currently being hit by increased fuel prices and rising inflation, will feel compelled to soak up the tax as an incentive for visitors to make the long drive west.
In February, four pubs, including The Golden Lion in Port Isaac which has appeared in TV show Doc Martin, closed on the same day.
The Pityme Inn at St Minver, The London Inn in Padstow and The Lugger Inn in Polruan, all part of The Cornish Inns group, were shut suddenly after the company’s co-director Jason Black said there was ‘simply not enough capital left to continue safely and responsibly’.
A month later, it was announced on Facebook that the pubs would re-open.
In March, trendy Falmouth restaurant Hevva!, with top chef Will Johnson at the helm, announced it was closing its doors just weeks after being listed in the 2026 Michelin Guide.
While Johnson told customers on Instagram ‘opportunities too good to pass up’ in London had contributed to the closure of the popular restaurant, he acknowledged that ‘times are tough for restaurants, and they’re getting tougher.’
Joby Godolphin, who is the owner of B&B Storm in a Tea Cup in St Ives, Cornwall, said the holiday tax is ‘ridiculous’ and ‘should not be happening’.
The 49-year-old businessowner said: ‘Tourism tax is a nail in the coffin because the last thing we need is people feeling like they are being taken the mick.’
Aside from leisure tourism, Andrew Clarke, commercial director at the Business Travel Association, also argues the levy is ‘a significant concern for the business travel sector’.
Business Travel Association boss Andrew Clarke argues the levy is ‘a significant concern for the business travel sector’ too
He adds, ‘Business travel and leisure tourism are two very different things, and it’s important that distinction isn’t lost as these plans progress.
‘People travelling for work are supporting jobs, investment and economic growth across the UK – whether that’s attending client meetings, visiting construction sites or travelling for training and events.’
Clarke raised concerns about how the costs may ‘add up quickly for businesses managing large travel programmes’.
He says, ‘Combined with existing VAT and wider travel costs, there’s a real risk of making UK business travel significantly more expensive and more complicated to manage.
‘There’s also a wider competitiveness issue here. Many European cities with visitor levies operate with lower hotel VAT rates than the UK, whereas these charges would sit on top of an existing 20 per cent VAT burden for hotels here.’
Clarke adds, ‘We’d urge the government to ensure business travel is properly considered as the legislation develops, with a clear and consistent approach that recognises the difference between discretionary tourism and essential travel for work.’
Concerns have previously been raised about how the tax could price working class families out of a holiday.
Butlin’s chief executive, John Hendry Pickup, previously shared his take on how the expansion of a tourism tax in the UK could impact families across Britain on Good Morning Britain
Butlin’s chief executive, John Hendry Pickup, who has been at the helm of the holiday park for three years, told ITV hosts Adil Ray and Ranvir Singh on Good Morning Britain the tax ‘feels at the moment that it’s going to hit the people who can afford it the least, the most, and I don’t think that’s fair’.
He explained how he saw it as a ‘ UK tax on UK families going on UK holidays’ and Butlin’s breaks outside of school holidays usually come to around £49 for a family of four, for four nights.
But with the additional fee of £2 a night, for example, it works out as a ’66 per cent tax on the people who can afford it the least’.
As for the impact it might have on Butlin’s, Hendry Pickup insisted ‘it won’t make our business unsustainable, we’re still full at the moment’.
However, he stressed that the tax ‘makes it extremely difficult for people who are coming to spend time with us outside of school holidays’.
