‘A tourist tax is playing with fire – and the Scottish government doesn't have a great track record'

Telegraph

13-03-2025

Walking out of Edinburgh Waverley on a Saturday, dropping into hotels, restaurants and pubs, listening for accents, there is at first no sign of the radical change coming the city's way. Hotel lobbies thrum with suitcases, museums throng, much-loved boozers are standing room only. Pints are sunk. All kinds of money is spent. The city hums, contentedly.
But a change is in the air. From next summer, Edinburgh will become the first city in the UK to charge a compulsory tourist tax after ministers in Scotland voted in favour of a five per cent levy. The additional fee, which follows those already introduced in Amsterdam, Barcelona, Berlin, Prague, Venice and Vienna, will cover all accommodation, from hotels and B&Bs to homestay properties let through websites like Airbnb and Vrbo.
Years in the making, the Edinburgh Visitor Levy scheme will take effect from July 24, 2026, and will mean, for example, that a £200-a-night hotel room costs an extra £10. The levy is projected to bring in £50m annually, to be spent on improving infrastructure citywide and creating affordable housing and, not unreasonably, its impact is expected to have repercussions nationwide.
'Introducing this ground-breaking visitor levy means realising a once-in-a-lifetime opportunity to invest tens of millions of pounds towards enhancing and sustaining the things that make our city such a great place to visit – and live in – all year round,' says Jane Meagher, the Leader of the City of Edinburgh Council. 'At all stages we've listened to and taken account of the views of industry and other stakeholders. It's in this spirit that we've also extended the amount of time hoteliers and small businesses will have to prepare for the changes that are coming in.'
According to the Council, the levy isn't an anti-tourism measure, or to deter visitors, but to sustain Edinburgh's status as one of the world's greatest cultural and heritage cities — the rationale being visitors who pay to stay in the city use public spaces and services, so should contribute to managing their impact. The levy, the Council confirmed, will give visitors the opportunity to 'do the right thing', to repay in-kind.
But the Council's position doesn't quite convey the delicate balancing act that will be required to keep hoteliers and locals onside. Edinburgh is an instantly beautiful city of romantic ancient buildings, but sometimes the view slips into something far less attractive. Memories of recent Fringe Festivals can't filter out snapshots of overflowing bins, piles of stinking rubbish and looming threats of refuse worker strikes.
'The way visitors perceive Edinburgh once the levy kicks in is going to change and there'll be an expectation for the city to be consistently well-maintained — so, where the money is spent needs to be transparent to both residents and visitors,' says Ross McLean, director of hospitality at The Royal Yacht Britannia and sister luxury floating hotel Fingal, anchored on Alexandra Dock in Leith. 'We feel the tourist levy will be positive, but it'll no longer be acceptable for overflowing bins of rubbish and the whole city looking untidy. If this isn't managed correctly, it could become a rod for the council's back.'
Worse even than this is the risk of putting potential visitors off completely. On paper, the tourist tax mitigates the idea of Scots as being among the most generous of hosts. All the same, research carried out by the Council returned no evidence to suggest that an accommodation tax would reduce demand or bookings. Conversely, it confirmed, Amsterdam — which has introduced its tourist tax to explicitly reduce visitor numbers — has continued to see a rise in demand, despite increasing its tax level from seven to 12.5 per cent.
For Nick Claydon, co-owner of boutique hotel Eleven Stafford Street in Edinburgh's West End, however, the worry remains that the tourist tax could kill Edinburgh's 'golden goose'.
He points to Edinburgh's recent attempt to impose an Airbnb ban as 'shambolic', with its introduction creating a huge administrative backlog. During last year's Edinburgh Festival Fringe, according to Airbnb, bookings dropped by 13 per cent, with the average stay shortened by almost 20 per cent.
'I think any popular destination that implements a tourist tax is playing with fire,' says Claydon. 'It all depends on how it is positioned and implemented — and this government does not have a great track record. Perhaps, the focus should be on making the government more efficient and supportive to the hospitality industry, then a tourist tax wouldn't be needed. It's possible to make it work, but why risk it?'
Another immediate danger, according to Claydon, is the levy having a wider impact on areas close to Edinburgh, particularly enviable golfing destinations like East Lothian and Fife. 'A poorly implanted tax could mean these visitors skip Edinburgh completely — and simply go elsewhere for their golfing holidays,' he adds.
As Edinburgh can imagine a rebooted city rise up amongst its volcanic hills, so the rest of Scotland is eager for extra preen and polish. Currently, Glasgow City Council is in the midst of a public consultation over introducing a like-minded five per cent levy (based on the city's average room rate, unlike Edinburgh, this would hike prices by approximately £4.29 per night). Others toying with the idea are Argyll and Bute, Perth and Kinross, Stirling and Highland Council. In Aberdeen, a jacked-up rate of seven per cent has even been proposed.
Cruise tourism isn't immune either. A Scottish Government motion to give local authorities the power to tax passengers disembarking in Scotland is also gathering momentum, with Orkney Islands Council backing the idea. Already the UK's most popular cruise ship destination, the islands receive more than 210,000 sightseers from sea each year. The overall sense is it's the right thing to do, even if hoteliers and tour operators will have to wait to see if the changes yield results.
'Each local authority needs to consider carefully whether a visitor levy will work for them, as what's right for one destination will not necessarily be right for others,' says Rob Dickson, director of industry and events at Visit Scotland. 'Before considering a levy, a local authority should examine the profile of their visitors – whether largely domestic or international – and the potential impact of a levy on businesses and visitors within the current economic and competitive travel landscape.'
Global influence
What helps nourish the idea, particularly at policy level, is Scotland's tourism economy continues to outperform the rest of the UK. Between January and June last year, international visitors spent almost £1.5bn, with an increase of 14 per cent on the same period in 2023. And regardless of market volatilities, the ambition of the national tourism strategy, Scotland Outlook 2030, remains: to be a global tourism pace-setter.
'International performance has been positive, driven by visits from North America,' adds Dickson, 'but the industry is operating in a challenging and uncertain economic landscape, with the cost of living continuing to impact the domestic market.'
In a period in which Scotland is undergoing significant tourism change, the vision is to realise a new look. New investment in roads and car parks is needed. As is money for electric vehicle charge points and waste services, piers and public toilets, walking trails and island ferries. Elsewhere, revenue is necessary to bring to life the country's potential third national park in Galloway and reverse the negative impacts of overtourism along the North Coast 500. It's an ambitious, if quixotic, shopping list and one, perhaps, that'll be paid for by future visitors — if they indeed choose to come.
The money talks loudest. But Scotland talks too, and who'd bet against the promise of rippling glens, silver sands and heather on the hills? The case for visiting despite any tourist tax ultimatums remains a strong one and there is a clear opportunity to ensure tourism is a force for good.
More than that, if a balance can be struck between the benefits tourism brings and ensuring communities are capable of opening their arms to it, then, perhaps, the idea of Scotland as a sort of fantasy Brigadoon could be possible after all.