Manchester has become the first UK city to launch a new ''tourist tax'' for visitors.

As of 1st April 2023, tourists to the city have been charged a levy of £1.00 a night in a number of city centre hotels and apartments.

Seventy-four hotels and guesthouses have signed up to the scheme making up the union called the Manchester Accommodation Business Improvement District, or ABID.

Adrian Ellis, General Manager of the Lowry Hotel, Chair of the Manchester Hoteliers' Association, and Interim Spokesperson for the Manchester ABID, commented in respect of the new scheme:

''A supplementary fee for guests, added to the final accommodation bill, is now an established norm within the travel sector across the world, and the Manchester ABID will now bring our accommodation sector in line with European and global counterparts and competitors.''

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What will the tax go towards?

The tax is anticipated to raise £3 million a year, which will go towards funding a range of projects aimed at improving the visitor experience in Manchester, with ABID stating that the funds will be used to:

"amplify marketing campaigns that drive overnight stays; help secure large-scale events, conferences, and festivals in low-season months; improve guest welcome and street cleanliness; and provide opportunities to futureproof the city's growing accommodation sector and wider visitor economy."

A third of the revenue generated through the scheme will be spent solely on press and marketing activities across the city.

From such marketing activities, it is hoped that this will bring additional revenue streams all year round to all hospitality and leisure businesses within Manchester.

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Opposition to the tax

Opponents of the Manchester tourist tax claim it could discourage tourists from visiting the area and reduce visitor numbers due to higher hotel prices compared to other cities.

Similarly, this could result in increased competition for hotels as they will compete with all the other UK cities that do not currently impose a tax levy per night.

Given the pressure the hospitality sector continues to face, recovering from the impact of Coronavirus, the increase in energy costs, and the limited consumer spending as a direct result of the cost-of-living crisis, challengers to the scheme claim that it is unfair to place a further burden on a sector that is already subject to many challenges.

Whilst any benefits of the scheme or potentially adverse consequences will only become evident over the remainder of 2023, studies have shown that tourist taxes do not deter tourism.

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Are others areas likely to follow suit with a tourism tax?

The Welsh government has similar plans in motion to introduce a tourist tax, as does the city of Edinburgh, with other cities at the initial consultation stages along with tourism hotspots such as the Lake District.

Matthew Hutton from Armstrong Watson, Accountants, Business and Financial Advisers, has provided some commentary on how the new taxation may impact hospitality and leisure in the Lake District:

''The hospitality and tourism sectors are such a key component of the Lake District, as our many fantastic businesses work hard to provide all guests with the best experiences to complement the incredible surrounding scenery.

Large numbers of tourists flock to the Lake District, with the latest surveys showing that the National Park welcomes 15.8 million visitors a year. However, the sheer volume of footfall in the area takes its toll on the landscape, with footpaths, fells and lakeshores falling victim to erosion, wear and tear, and litter.

The infrastructure of the small towns and villages throughout the Lakes can also be pushed to their limits from the number of people visiting, with insufficient parking and narrow pavements, among other issues.

If the funds generated by a tourism tax were appropriately reinvested back into improvements benefitting the area and the sector, it could be an extremely useful tool to address some of these issues; however, it is already proving to be a divisive subject.

Detractors think that an additional cost burden during a cost of living crisis may drive those very same tourists who generated a total of £1.35 billion for the area in 2021 away.''

The Northern Powerhouse Partnership has released a report recommending the introduction of a tourism tax on hotel stays to support culture, protect the environment, and improve visitor experience, which, when charged at the same rate as Manchester, could raise £5.5m a year for the Lake District.

Widespread adoption across the UK may level the playing field and alleviate any adverse consequences of introducing the tourist tax, helping the hospitality and leisure sector to continue to recover to pre-pandemic levels.

Myerson's Hospitality and Leisure team will continue to evaluate the impact of the tourism tax in Manchester and how the funds raised will be utilised in the city in the new year.

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