Issue 13

TIME FOR A TRANSIENT VISITOR LEVY?

By Cllr Andrew Burns, Council Leader, City of Edinburgh Council

Without question, tourism is as a key sector for Edinburgh and, more widely, Scotland as a whole.

As the current Council Leader in Edinburgh, I fully understand the importance of tourism to our local economy – I know that Scotland’s capital city is one of the most desirable tourist destinations in Europe, welcoming nearly 4million visitors a year.

And Edinburgh also acts as the gateway to Scotland, with around 60% of visitors spending time in Edinburgh before seeing other parts of the country.

And Edinburgh also acts as the gateway to Scotland, with around 60% of visitors spending time in Edinburgh before seeing other parts of the country. The world-class cultural offer in the Capital is a vital stimulus for the City Region’s wider creative and service industries and its attractiveness to knowledge-based workers, businesses and students.

Edinburgh’s cultural offer centres around its 12 major festivals, which have unrivalled international appeal, and the year-round cultural infrastructure (providers and venues) which enable the festivals to thrive.

This requires significant ongoing investment to retain Edinburgh’s pre-eminent Festival City status. Without it, Edinburgh risks being left behind by other competitor cities and failing to capitalise on the skills, innovation and growth potential of this key asset.

A targeted Transient Visitor Levy (TVL) – or tourist tax – could provide such a ring-fenced stream of vital investment?

I fully appreciate that there are varying views on the suitability of applying such a levy here in Edinburgh, and want to briefly expand on why I feel the time is now right to seriously consider the introduction of such a charge.

Firstly, such a levy is standardly applied across a whole host of our neighbouring European partner countries: Germany, Austria, Switzerland, the Netherlands and Greece; to mention but a few. And many of the individual States in America do likewise.

Most of us – at some stage in our recent travels – will have paid such a levy. And I just do not encounter many – if any – travellers who make a conscious choice NOT to visit a country, or specific city, because of its policy on tourist taxes?

Do we really believe that a modest TVL charge, on hotel occupancy, would be a significant deterrent to visitors?

I accept that how such a potential charge is legislated for, and then collected/administered, is a serious issue of concern – but if the many cities and countries referenced above can cope with its apparent complexities; then I’m certain Scotland could do likewise.

Secondly, I would completely accept that the provision of an adequate stock of visitor accommodation is crucial to the continued success of Edinburgh as a visitor destination. If visitor accommodation is overpriced, of insufficient quality, or simply unavailable, the city’s visitor economy will suffer.

But there is no doubt that Edinburgh’s hotel market is performing extremely strongly at the moment, with the three main measures of hotel performance – occupancy, average daily rate (ADR), and revenue per available room (RevPAR) – all peaking recently in 2014.

The chart below demonstrates the long-term trends in overnight visits and bed-nights spent in Edinburgh, highlighting the slow climb in visit numbers and the gradual recovery in bed-nights since the drop-off at the time of the 2008 financial-downturn.

 

Edinburgh has a substantial existing stock of visitor accommodation, with approximately 43,600 beds in 20,700 rooms across over 2,000 establishments; with investor interest in hotel properties in Edinburgh being currently very strong, with yields on recent hotel transactions averaging 6.22%. The mean price per bedroom for recent hotel transactions in Edinburgh was £164,170, compared to £97,236 for regional UK cities and £337,774 for London.

As of October 2015, there were eight hotels comprising 1,230 hotel rooms under construction in Edinburgh. Excluding minor and superseded developments, a further ten developments representing 1,161 rooms have planning consent, while 20 developments representing over 1,804 rooms are awaiting planning determination. This gives a total pipeline of 4,195 bedrooms across 38 properties. This pipeline includes a mix of qualities and operators, and is believed to be adequate to meet projected future demand.

And thirdly – let’s be completely frank about this – local community budgets are under pressure as never before. Any cursory glance at this year’s Scottish Government budget-settlement can leave you with no doubt about this fact.

A Tourist Levy ….. is applied across a whole host of our neighbouring European partner countries: Germany, Austria, Switzerland, the Netherlands and Greece… many of the individual States in America do likewise.

These financial pressures will undoubtedly mean schools, social-care, the young, the old, and the vulnerable; will be the clear funding priorities prior to the allocation of significant additional sums to culture and leisure.

I think we ignore this reality at our peril.

How easy it could be for Edinburgh to lose its pre-eminent position as a top visitor destination if we fail to be honest with ourselves about these very real challenges?

All of this leads me to the conclusion that we need to get serious about defending our tourism offer.

We need the legislation, which would be required for a statutory Transient Visitor Levy, as the best option for securing additional ring-fenced finance on a secure basis that would allow long-term planning.

A targeted, and modest, levy of say 2% on hotel-room occupancy, which is not uncommon in the many destinations referenced above, would rise between £4million and £5million per year.

Directly re-invested into the Capital City’s tourism offer, such a sum could help ensure we retain our pre-eminent position for years to come.

Isn’t that all a modest price worth paying, for a prize worth securing?

Councillor Andrew Burns is Leader of the Labour Group and the City Council in Edinburgh

By Cllr Andrew Burns, Council Leader, City of Edinburgh Council

Issue 13

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