The Scottish Tourism Alliance has called for close monitoring of Edinburgh’s visitor levy as it comes into effect on Friday 24 July.
The STA has reiterated concerns about the potential impact on Scotland’s tourism and hospitality industry at a time when businesses continue to face a mixed trading and economic environment.
The organisation said the practical impact of the levy on visitor behaviour, demand and secondary spend must be carefully assessed before other local authorities commit to introducing their own schemes.
Marc Crothall MBE, Chief Executive of the Scottish Tourism Alliance, said: “Introducing a successful visitor levy scheme is about the right application, right place and right time, if it is to act as a force for good that enhances our visitor offering and appeal.
“At the moment, it is the view of the majority of those in the industry that I have spoken to that none of these conditions of success is currently in place, and the introduction of a further charge on those who choose to visit and stay in a destination risks more harm than good.
“One of the biggest concerns within the industry is around the impact on secondary visitor spend once people arrive, which we hear, without a levy in play, is under pressure, particularly among families and groups.”
Crothall said there remains uncertainty around how both domestic and international visitors will respond, and whether the levy could influence decisions around overnight stays, shorter breaks or spending in restaurants, pubs, shops, attractions and other local businesses.
He added: “These are impacts we’ll be monitoring over the coming weeks and months, and we will be expecting authorities to do the same.”
The STA said a visitor levy has long raised concerns around Scotland’s price competitiveness, particularly at a time when the domestic market is under pressure.
Crothall said: “With one of the highest rates of VAT in Europe, Scotland is already one of the most expensive destinations to visit, and with VAT charged on the levy, this effectively becomes a double tax, further inflating costs for consumers.”
He added that Edinburgh had recently been reported in the Post Office Travel Money City Cost Barometer as the third most expensive European destination for a mid-range two-night weekend break for two, including meals, drinks, local transport and visitor attractions, behind Oslo and Copenhagen.
The STA said it recognises the financial pressures facing local authorities, but will be looking closely at how levy income is invested.
Crothall said: “We’ll also be looking at how this additional levy income will be invested, whether it’s used to genuinely enhance the visitor destination, or will disappear into funding routine core council services like waste collection.
“The legislation is clear that it must be treated as incremental spend and be used to enhance the visitor experience, it should be aligned to the destination’s visitor economy strategic aims and objectives.”
The STA said the cost of doing business remains the number one concern for tourism businesses across Scotland.
Staff costs, food inflation, energy, insurance and business rates are all putting sustained pressure on margins.
Crothall said that for many businesses, the challenge is no longer simply about revenue or occupancy, but whether they can make a reasonable return and retain enough to invest in their product and people.
He added that while the summer months can give the impression of a booming tourism industry, the trading picture remains mixed.
International demand remains strong overall, although the STA said some pre-contracted tour groups are smaller than in previous years.
The organisation also pointed to concerns around rising aviation costs, including the potential impact of sustainable aviation fuel requirements and the effect higher prices may have on customers.
Domestic bookings are holding up reasonably well in many parts of Scotland, although not everywhere, while booking lead times have generally become shorter.
Crothall said: “Businesses understand the need for good regulation, but the cumulative impact means that there is a real risk that we undermine competitiveness and investment, and Scotland must remain competitive on both price and quality.”
The STA warned that collection of the levy adds further cost pressure for accommodation businesses already stretched, with wider implications for tourism and hospitality businesses in local communities if visitor numbers decline.
Crothall said autumn will be critical for many businesses.
He called for a clear commitment to growth in the visitor economy, serious consideration of a reduced VAT rate for hospitality and tourism, particularly in light of Ireland’s move to 9%, and meaningful reform of the non-domestic rates system.
He added: “Scotland has many high quality outstanding tourism products, we are nation that is recognised for delivering world class events spanning live music, sport, festivals, we have some of the best heritage and landscapes to explore which have strong international appeal.
“But businesses need the conditions to invest in quality, innovate, employ people and compete on price.
“That has to be a priority if we want the visitor economy to fulfil its potential, now, more so than ever, accepting the status quo and being complacent is not an option.”