Top restaurateurs and hotel owners claim the proposed tourist levy will stifle growth, while London’s mayor pushes it as a new funding stream
The UK government is preparing to hand local councils the authority to levy an overnight visitor levy on stays at hotels, B&Bs and short-term rentals. The proposal, expected to take effect in early 2028, would allow each authority to decide whether to charge and at what rate, with a typical ceiling of five per cent of the accommodation price.
Food costs are excluded, and the revenue could be used for any local priority the council chooses.
High-profile figures in the hospitality world have reacted with alarm. Chef Simon Rogan holder of nine Michelin stars across venues such as L’Enclume and Aulis, said the levy feels like “another knot around the throat” of an already pressured industry and has forced him to suspend further UK expansion.
Sir Rocco Forte chair of the luxury hotel group that runs Brown’s Hotel in Mayfair, called the measure a “disgrace” that undermines growth. Even Sir Tim Martin founder of the JD Wetherspoon chain, warns that the added cost will ripple through his 56-hotel portfolio.
Economists warn the fiscal upside may be outweighed by a sharp drop in demand. A study by the think-tank Tax Policy Associates estimates the levy could generate roughly £600 million a year, but also predicts a loss of six million overnight stays and a £700 million contraction in tourism spending, as visitors either shorten trips or choose destinations that do not impose the charge. The industry lobby UKHospitality projects that a five-per-cent levy in England alone could cost 33,000 jobs and shave £2 billion off the national economy, at a time when the country is grappling with a million young people not in education, employment or training.
Political backing and the promise of reinvestment
Mayor Sadiq Khan has publicly endorsed the tax, arguing that a “well-designed, modest levy” would create a new source of funding to bolster London’s visitor offer, from transport infrastructure to cultural programming. In a recent statement, Khan said the money could be reinvested in the very assets that attract tens of millions of tourists each year, helping the city stay competitive on the global stage. He is not alone; a coalition of Labour metro mayors has signed a letter to the Treasury urging that the powers be granted, citing examples from cities such as New York, Paris and Rome where similar charges fund local amenities.
Public sentiment and cultural stakes
Polling commissioned by the London Heritage Quarter found that two-thirds of recent overseas visitors would be discouraged by a new surcharge, while three-fifths said they would either shorten their stay, seek cheaper accommodation or cancel the trip altogether. The survey, which covered 1,005 adults from ten different countries, underscores the risk of reduced footfall in a market already facing price pressures. Meanwhile, Nicholas Cullinan director of the British Museum, has hinted that a portion of the levy could help keep the museum free of charge, turning the tax into a cultural safeguard if the funds are earmarked appropriately.
How Britain compares internationally
At present, England is the only G7 nation that lacks a statutory framework for local tourist charges. Introducing a levy would bring the UK into line with rivals such as Paris, Rome, New York and several other European capitals that have long used similar taxes to fund tourism-related projects while capping rates to avoid excessive burdens on visitors. Critics argue that granting open-ended power to mayors could lead to rates higher than those seen abroad, whereas supporters point to the modest five-percent ceiling as a safeguard against runaway fees.
Whether the revenue will indeed be ring-fenced for heritage, transport or public-space upgrades remains the central question. If councils allocate the money to visible improvements that benefit both residents and tourists, the levy could gain broader acceptance. Conversely, if the funds simply plug budget shortfalls without tangible upgrades, the tax may be remembered as another obstacle that stifles growth in a sector already battling rising costs.
