Ministers have confirmed they will press ahead with controversial plans to allow the mayors of England’s largest city-regions to charge a tax on overnight stays, in a move that has reignited fury across the business travel and hospitality industries.
The Overnight Visitor Levy Bill was formally announced during the State Opening of Parliament on Wednesday 13 May, with the proposals set out in the King’s Speech despite a sustained lobbying effort from operators warning of damage to inbound tourism and corporate travel demand.
Under the legislation, the 13 Mayoral Strategic Authorities in England, including London, Greater Manchester and the Liverpool City Region, will be empowered to introduce a local accommodation levy on hotels, guest houses, bed and breakfasts and short-term lets. The measure was first trailed in last autumn’s Budget and is intended to generate ring-fenced revenue for local infrastructure, transport and cultural projects in the host city-regions.
The government argues that the move will bring England into step with other leading destinations. “Similar” cities such as New York, Amsterdam and Rome already levy a charge on overnight visitors to help fund local services, while Scotland and Wales have already passed legislation giving their councils equivalent powers. A House of Lords Library briefing published alongside the Speech sets out the policy framework in detail, confirming the bill will define the structure of the tax and the conditions under which mayors may apply it.
Industry warns of fresh blow to inbound travel
The decision to proceed has, however, drawn sharp criticism from the very groups the government had been urged to consult more closely. Joss Croft, chief executive of inbound trade body UKinbound, said his members remained firmly opposed to any further tax on international visitors.
“While we have not yet seen the detail of the legislation, UKinbound does not support further taxation on international visitors, who already contribute through one of Europe’s peak levels of VAT and some of the world’s highest visa and ETA fees and Air Passenger Duty,” Croft said. “As these powers are taken forward, the devil will be in the detail, including ensuring any levy is simple to implement, creates no additional cost burden for businesses, and that revenues are clearly reinvested into the visitor economy.”
Allen Simpson, chief executive of UKHospitality, was blunter still, branding the proposal “wildly unpopular, as well as economically destructive”. “It is nonsensical for the government to go ahead with such an unpopular measure,” he added. “There is still time for the government to think again and stop the tax.”
Business travel buyers have already called for corporate trips to be exempted from any forthcoming levy, arguing that work-related travel is non-discretionary and should not be lumped in with leisure tourism. With average daily rates in London now sitting above £200, corporate buyers fear a percentage-based surcharge — reported to be in the region of five per cent — could push the UK capital further down the league of competitive meetings and incentive destinations.
Khan welcomes “great news” for London
The most prominent supporter of the bill remains the Mayor of London, Sadiq Khan, who has long argued for a devolved tourist tax and described the announcement as “great news” for the capital. “The extra funding will directly support London’s economy and help cement our reputation as a global tourism and business destination,” he said.
Khan first floated the idea of a tourist tax for London in a bid to fund public services and the hospitality sector, with City Hall analysis suggesting a modest per-night charge could raise as much as £240 million annually for the capital alone. Mayors in Liverpool, Greater Manchester, the West Midlands and York and North Yorkshire have likewise indicated they intend to use the new powers should they receive Royal Assent.
Industry voices remain unconvinced that the upside justifies what they see as a stack of additional charges on UK travel. As one recent opinion piece warned, the combination of an overnight levy, rising business rates and the absence of VAT-free shopping risks eroding London’s competitiveness against rival European capitals at exactly the moment international business travel is rebounding.
The government has said it will “shortly” publish its formal response to the public consultation on the levy carried out earlier this year. That response is expected to contain the operational detail buyers and operators have been demanding, including which categories of accommodation will fall in scope, how the levy will be collected, and whether any exemptions — for example for business travel, residential bookings or under-18s — will apply.
For now, corporate travel managers will be watching the Bill’s progress closely. With hotel rates already climbing, business rates set to rise sharply in 2026-27, and a new visitor levy now on its way, the UK’s cost-of-stay equation looks set to shift again, and not in buyers’ favour.