Instead of introducing one nationwide charge, local leaders will decide whether to apply the tax, set the percentage added to overnight accommodation and determine how the money is spent. The government says the revenue could support public transport and visitor attractions but businesses within the tourism sector are concerned that increasing the cost of a stay will reduce demand and visitor spending, putting the future of their business at risk.
Less spending affects the whole tourism sector
Tourist tax increases the total cost of a trip.
Accommodation providers will feel the impact of tourist tax first, but they won’t be the only businesses affected.
Visitors reducing the length of their stay, choosing a cheaper destination or spending less while they’re there means less money going into restaurants, attractions, transport providers, tour operators and other businesses that rely on visitor spending.
Research conducted by Oxford Economics for UKHospitality estimates that a 5% tourist tax across England could result in 11.9 million less overnight stays and £1.8 billion less in visitor spending by 2030.
UKinbound members we work with have expressed concern for London, an already expensive destination that’s been described as “not good value for money”.
Oil prices are increasing the cost of travel before tourist tax is taken into account and if the overall cost becomes too high, visitors will opt to stay in destinations where they get more bang for their buck.
Tourist tax as a reality
Edinburgh introduced a 5% tourist tax in July 2026, applying to the first five nights of eligible stays. The impact on visitor numbers or spending is too early to measure but accommodation businesses are already reporting difficulties calculating the tax. It’s reported each mistake takes around eight minutes to correct which adds to administrative costs with the potential for businesses being left to cover the difference when customers have been undercharged.
The impact goes beyond accommodation providers. The Edinburgh International Festival covers the cost of performers staying in the city while appearing at the event and expects tourist tax to add around £50,000 to its annual accommodation costs. This leaves less money available for the programme and could result in higher ticket prices or fewer performances and when the quality of a live event drops, it can negatively impact numbers the following year.
A strategy for stronger financial health
Tourism businesses can’t control whether their local authority introduces tourist tax or visitor demand but they can take action on money already owed to them.
The UKinbound members we work with are already making debt recovery part of their financial strategy, recovering money owed from tour operators and travel agents to increase cash flow and invest the money back into their business.
One client we worked with this year was owed over £13,000 from a transport company, with the balance outstanding for more than a year and a half, despite the client’s attempts to come to a resolution. Within two months of referring the debt to us, the client received the full balance plus costs & interest, totalling over £15,400.
Following recovery, the client agreed an internal point where outstanding invoices would be referred to us, preventing future balances from remaining unpaid for similar lengths of time.
Protecting future revenue
Recovering an unpaid invoice shouldn’t come at the cost of future bookings.
With VisitBritain’s inbound tourism guide stating the average time to build a relationship with a new distribution partner and start seeing results is between 12 to 18 months, losing an established partner could leave a gap in future bookings that takes more than a year to replace. Time and money that businesses in the sector don’t have.
The UKinbound members we work with who must maintain their working relationships find Redwood Credit Management aligns with their business priorities and can deliver recovery results through non-confrontational communication and flexible payment plans.
Tourist tax will affect each destination differently but any reduction in visitor numbers or spending will be felt across the sector. Recovering money already earned, while protecting the relationships behind future bookings, gives tourism businesses more to invest back into their business as the tax takes effect.
