Despite a boom of regeneration in towns and cities across the UK, it is no secret that convention bureaux are not bathing in bathtubs full of cash. A destination’s appeal for business travel does require steady investment. Unfortunately, the Chancellor of the Exchequer is not driving around the land throwing wads of fifties out of his red briefcase. If destinations are going to survive the competitive battlefield of business tourism, then they are going to need to look after themselves.
One idea that has been floating around for a while is a visitor levy, a so-called ‘bed tax’, which was the topic of much debate at The Business of Events (TBOE) meeting, which took place at Portcullis House, Westminster, 25 October.
However, the idea of adding, say, £2, to each room night in hotels, is a divisive one. Some destinations around the world have made it work, others have not. So what are the arguments for and against?
James Heappey MP, chair of the All Party Parliamentary Group for the Events Industry does broadly support the idea, and while he accepts the reluctance of many, still wants the industry to have a conversation on the matter.
“Convention bureaux and destination management organisations (DMO) around the country tell me that they just don’t have the resource to properly market their destination and to win major new business when competing against other cities around the world with bigger budgets,” Heappey told CN.
“I’ve looked at many of those cities and they have something in common: they have a local mechanism for raising money to spend on the marketing of their destination. In many cases it’s a bed tax, but others will do it in slightly different ways. I believe in a hypothecated tax raised from visitors to pay for enhancements to the visitor experience and to improve the marketing of the destination.”
So what are the alternatives for local authorities to raise funds? Heappey adds: “I don’t know but I’m hoping that as a consequence of the debate I’ve kicked off either other options will come forward, or we’ll coalesce around a bed tax, or perhaps we’ll all agree that it’s not worth doing. Government isn’t going to force this on the industry.”
Michael Hirst OBE, chair of the Business Visits and Events Partnership (BVEP), is a vocal critic of the ‘bed tax’. While Hirst concurs that local CVBs and DMOs needs to find funding, he told CN he doesn’t believe mandating additional costs on visitors staying overnight is a good move. He said: “It penalises the very visitors we are trying to attract to events, and there is no mechanism in place to ensure any additional revenue will end up in places where the extra funds will be spent on improved destination marketing.”
Hirst points to data collected through surveys. He notes: “This research has told us that affordability is a key consideration when choosing a destination. Imposing a tax on overnight stays will increase visit costs and could well result in less business rather than more. Britain’s position in the World Economic Forum Competitiveness table is already poor in terms of taxation and the bureaucracy around collecting those taxes. Furthermore, a levy on overnight visitors only seeks to deal with around 20% of visitors to a destination, leaving the other 80% of day visitors not to bear any cost.
“It is argued that only £2 per night won’t make any difference and other world-wide destinations do it with little consequence. We should take into account the overall cost of hosting events in the UK, which includes the highest rate of VAT in Europe and Air Passenger Duty.”
believe it important to better finance their destination management and promotion, they collectively and voluntarily agree to fund this by way of a Business Improvement District or Tourism Business Improvement BID or a voluntary business levy towards marketing and management funding. These businesses will therefore be an intrinsic part of the arrangements to which extra funding achieved in this way will be spent and will not impose further costs on their customers.”
It doesn’t look like the debate will be put to bed any time soon…
Hirst’s mooted solution is a Business Improvement District (BID). He explains: “I believe a more equitable position is that where businesses in a specific destination
