Hotel Bed Tax ... good or bad?

Manchester became the first UK city to charge a tourist tax. The northwestern English city introduced the new fee as of 1 April 2023. The nightly charge applies to all visitors who stay in short-stay serviced apartments, hotels or guesthouses within a designated city centre footprint. Around 75 hotels are currently within the HTT (hotel tourist tax) map, including the iconic Lowry Hotel.

Dynamic pricing has been a thing in hotels for a long time, especially with the budget chain hotels and larger groups like Premier Inn and Travelodge. In this world of technology, it is designed to monitor in house occupancy levels versus forward bookings and enquiry levels online, and uplift or lower the PPN accordingly. To put that into context, it is basically more expensive if the hotel is busy, and less expensive at lean times. School holiday periods, a busy event in that particular town or city taking place, a bank holiday weekend, leisure guests versus business guests, mid winter versus high summer in the South West beach resorts, are all very good examples.

So what of the hotel bed tax? HTT Using Manchester as a test ground, people seem divided. The money is returned to the local government who then reinvest it in the local tourism and hospitality economy, so it seems a reasonable idea on the face of it, but so far opinion is split right down the middle. On the one hand it helps to cope with the delivery of over 6000 new hotel rooms coming to the city over the next 3 years and the growth in people numbers using local services that naturally brings, and on the other it is mired in grey areas. What constitutes a tourist? If I am a businessman staying in a serviced apartment for the week, am I considered a tourist also? Who gets the lion’s share of the extra income, the police? the refuse company? accommodation providers? and will every city be looking to have an ABID (accommodation business improvement district) of their own? The government reckons that it is worth circa £60M to a region alone when introduced properly.

Much like ULEZ Like ULEZ with its plans to roll out across other cities beyond London and Bath, to Bristol, Exeter, Greater Manchester and presumably most big towns and cities eventually, will the hotel bed tax (HTT) become more prevalent in the same places, likely. There is an argument from London, that there is already a tax on hotel rooms anyway throughout the UK, it’s called VAT, said one large hotel operator. The current bed tax collects on average an extra £3.40 per room per night across the providers, and lthough some online Tripadvisor comments have ranged from “I will never visit the city again” to “confused, stayed last week for £126, this week it was £211 and that included the tax thing, go figure” the jury is still out. I suppose there is an argument for there being no parity across the country, and with local authorities able to agree their own figure, and London being next, will it all just get lost and mixed up in dynamic pricing anyway.

Any scheme designed to collectively boost the local tourist economy for a recently beaten up hospitality industry, and drive more foot traffic into the town is good right? It provides a boost, adds value to the marketing capability of promoting that location, and with that comes growth in other sectors which would be very much welcomed in the retail space at present surely.

Many hotel owners and operators, and hospitality industry think tanks believe that it is vital to find ways of ensuring that city and town council leaders or mayors are able to invest in long-term economic priorities such as transport, promotion, and infrastructure, without having to ask the Treasury every time.

An interesting subject for all central hotels to consider for the coming decade, whether they be single B&B owner operators, pub restaurants with guest accommodation, or large corporate hotel chains.

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