The Edinburgh Transient Visitor Levy Consultation 2018, published yesterday is in the view of our member associations representative of the accommodation sector plus a number of key trade associations, a report which lacks transparency, detail and the robustness required to provide the opportunity for proper, balanced consideration.
There’s the assumption in the report that visitor numbers will increase. The recent figures that we have gathered paint quite a different picture of Edinburgh’s tourism economy. STR figures for this year show that occupancy in Edinburgh hotels is down by 0.8%, RevPar is down 0.3% and also that there is no growth in volume for Scotland, in fact performance has been in steep decline since the beginning of the year, comparing year on year figures. This has been reflected in conversations we’ve had this week with tourism businesses and the Federation of Small Businesses. The information we’re receiving points to a downward turn in forward bookings.
We consistently cite the fact that the UK has one of the highest rates of VAT in the world, and that destinations where a tourist tax has been introduced successfully have a much lower rate of VAT. While it is certainly true that many tourism businesses are below the VAT threshold, as suggested in this report, we would think that it is certainly not the case that these are the majority within the accommodation sector in Edinburgh.
The report fails to address to issues around the Brexit unknowns and most notably the fact that the UK consumer spending is being squeezed, as evidenced in recent reports from the retail industry which reflect what we are seeing across the tourism industry. Visitors will still come to Scotland, but will they continue to spend at a level that supports the growth of our tourism economy? The low visitor spend has been acknowledged by the Tourism Minister; Ms Hyslop MSP recently underlined the fact that we should not be complacent regarding the recent announcement on European visitor numbers as their spend is low.
Research shows that a 1% increase in UK prices or relative exchange rates would lead to a 0.61% fall in tourism expenditure. This affects every business who benefits from Scotland’s tourism economy. If we tax our visitors more, they will spend less.
What has continued to remain apparent is that the City of Edinburgh Council lacks a full appreciation of the current industry environment and the potential impact of a tourism tax; the rising costs that our industry is currently dealing with, the current tax climate within the UK which differs greatly from some of the destinations cited as having implemented a tourist tax successfully and of course the fact that tourism businesses already contribute to the funding and economy of our destinations through different means, one of which is the BID route.
This lack of understanding has also been reflected in the views put forward by the Scottish Green Party and the Scottish Labour Party. The Scottish Government’s Tourism Tax Discussion has not only facilitated an open, transparent and inclusive conversation, it has brought the most important information and evidence about the impact of a tourism tax on Scotland’s visitor economy to light for all stakeholders to digest.
The consultation period ended on 25th January and we acknowledge that it will take time to assimilate and analyse the evidence communicated through all mediums to this nationwide discussion.
Earlier this week the STA and UKHospitality requested a meeting with the Finance Secretary to discuss the timescale for the analysis and publication of the consultation results and we trust that the Scottish Government’s position of having no plans to legislate to give local authorities powers to raise revenues through a tourist tax will remain unchanged.
We are in no doubt that further economic analysis, and examination of options must be done to assess the impact of a tourism tax on our tourism economy, together with a dispassionate examination of policy options, if the Scottish Government’s position of having no plans to introduce a tourism tax were to change.
The current picture of Scotland’s tourism industry is that of a challenged sector under pressure, enduring a continued pattern of rising costs, facing a recruitment crisis which has the potential to put our industry growth in decline. Neither Scotland’s tourism industry nor its consumers can afford to bear any additional costs.
Over the coming weeks the STA will continue to engage with industry to collect evidence on the current outlook for tourism businesses.