Industry body highlights millions in potential costs for businesses, advocating for simpler fixed-fee models adopted elsewhere.
The Scottish Tourism Alliance (STA) is calling on local authorities across Scotland to heed the operational challenges emerging from Edinburgh’s new 5% visitor levy, which came into effect last month. The industry body warns that the complexity of calculating the charge could cost businesses millions of pounds and risks undermining the city’s tourism appeal.
Edinburgh became the first Scottish local authority to implement a tourist tax on 24 July 2026, imposing a 5% charge on the cost of overnight accommodation, capped at five consecutive nights. The City of Edinburgh Council anticipates this levy will generate approximately £50 million annually, earmarked for reinvestment into local services and infrastructure.
However, one month into its implementation, accommodation providers are reportedly grappling with significant difficulties, particularly concerning how booking platforms handle the percentage-based charge. The core issue, according to the STA, stems from legislation requiring the levy to be calculated solely on accommodation costs, excluding non-accommodation elements such as breakfast or parking.
This nuanced calculation is proving problematic for many operators. “We always knew there would be challenges with the percentage model and we are now starting to see some of those coming through. Calculating a percentage may seem simple, but the reality is causing major problems for businesses,” stated Marc Crothall MBE, Chief Executive of the Scottish Tourism Alliance.
Businesses report that staff are spending considerable time correcting inaccurate guest bills generated by some booking platforms that are not yet equipped to precisely differentiate between accommodation and other charges. Anecdotal evidence suggests each correction can take around eight minutes.
“Some of the booking platforms are not yet set up to work with the percentage model properly and accurately remove non-accommodation elements from the final levy calculation, and that means businesses are having to go back and correct bills. That takes time, and it costs money,” Crothall explained. He cautioned that the cumulative cost of these administrative burdens “could run into millions of pounds,” questioning whether the 2% businesses are permitted to retain for administration comes close to covering these expenses.
The STA has consistently advocated for a simpler fixed-fee model, which it believes would be easier for businesses to administer and clearer for visitors.
Highland Council Opts for Fixed-Fee Approach
In contrast to Edinburgh’s model, Highland Council has agreed to proceed with a public consultation on a tiered fixed-fee visitor levy. The proposal, which could generate an estimated £9 million annually for tourism infrastructure and community projects, suggests a £5 nightly charge for most accommodation types, with a reduced £2 charge for campsites and hostels. Notably, the Highland levy would apply for nine months of the year, exempting December, January, and February. Accommodation providers in the Highlands would be allowed to retain 5% of the collected levy.
This preference for a fixed fee follows an amendment to the Visitor Levy (Scotland) Act 2024, passed in May 2026, which specifically grants local authorities greater flexibility to implement either a percentage-based or fixed-amount levy. The original 2024 Act, which received Royal Assent in July 2024, empowered councils to introduce such a charge but initially saw more councils consider percentage models.
Crothall welcomed Highland Council’s approach. “The fixed-fee approach is what we have been advocating and what we pushed for when the legislation was changed. It is simpler and, importantly, we know the booking platforms can accommodate it,” he commented. However, he also stressed the importance of a thorough economic impact assessment to determine the appropriate level of any charge, asking, “How do we know £5 is the right figure? Could it be £3? What impact will it have on bookings and jobs?”
Wider Economic Concerns
Beyond administrative hurdles, the STA is urging comprehensive monitoring of Edinburgh’s levy’s broader impact on visitor spending. Concerns persist that additional costs could lead visitors to shorten stays or reduce spending in other sectors of the visitor economy, such as restaurants, shops, attractions, and cultural events like the Fringe.
You Might Also Like:
Progress Made on Highlands Visitor Levy but ASSC Warns It Must Be Backed by Economic Evidence
Hospitality warns fresh cost hikes will force closures and job losses
Edinburgh’s Royal Yacht Britannia crowned number one visitor attraction in the world
Final call for North East tourism businesses as Thistle Awards extend deadline
“We need real-time information to get a true picture of whether the money raised from a visitor levy outweighs the negative impact on the wider visitor economy,” Crothall asserted.
Tourist taxes are becoming more common globally and within the UK. Manchester introduced a £1 per room, per night “City Visitor Charge” in April 2023, raising £2.8 million in its first year. Liverpool also employs a percentage-based levy through an Accommodation Business Improvement District, and Bournemouth, Christchurch and Poole introduced a £2 per room, per night tax in July 2024. Cities across Europe, including Amsterdam, Paris, Lisbon, and Rome, have long implemented similar charges.
Despite the potential revenue generation, industry stakeholders in Scotland remain wary of further eroding price competitiveness, especially with existing VAT rates. The STA’s message to other councils contemplating a visitor levy is clear: “look at what is happening there, listen to the industry, carry out a detailed economic impact assessment and work with us to get the implementation right.”
