A ‘tourist tax’ charged on visitors coming to the North East is expected to come into force in 2028.
Ministers announced late last year that mayors like Kim McGuinness are set to be given the power to impose a new levy on overnight stays at hotels, holiday lets, bed and breakfasts, and guesthouses across the region.
The Labour mayor has suggested that the charge could be set at £2 per night, with the aim of raising £20 million each year that could be reinvested into helping stage major events and boosting the North East’s cultural attractions.
Councillors were told on Tuesday morning that any proposed levy, on which the Government is currently running a public consultation exercise, would likely be introduced from April 2028 at the earliest.
Rob Hamilton, the North East Combined Authority’s (NECA) assistant director of economic strategy and innovation, reported to a scrutiny committee that the “modest” charge would not have a major impact on holiday prices, based on similar levies elsewhere in the world.
He said: “Although the evidence is not great, we have seen nothing to suggest that the introduction of a modest levy of under £5 per night, and we might be talking well under £5 per night in the region… we have not seen evidence that it would have an impact on the level of demand.
“There is one in the Maldives where they introduced quite a big percentage levy and we would not be looking to do that. We would not be looking to increase people’s holiday costs by 10% or anything on that level.”
Gateshead councillor Dawn Welsh said she was supportive of the idea but cautioned that it must not do more harm to an under-pressure hospitality industry.
The Liberal Democrat added: “There are significant headwinds in hospitality at the moment, inflationary pressures primarily, and what we must be careful not to do is to pile on any onerous additional administrative burden to retail and hospitality industries.
“I think they need as much support as we can give them at the moment and I would encourage officers to consult with hospitality businesses and listen to what they have to say because at this stage it is very important to get them on board and work collaboratively with them to benefit the region and them.”
Newcastle Labour councillor Steve Fairlie suggested that exemptions could be offered for budget accommodation like hostels and for people who walk or cycle to their bookings.
NECA operations director Alan Reiss said that £20 million per year was “serious” money that could have a major impact in growing the tourism industry, with ambitions to double the number of people visiting the North East over the next decade.
According to Visit Britain, the number of overseas tourists coming to the North East in 2024 fell 6% to just 429,000 compared to the previous year and is the lowest in the country.
Colin Ferguson, leader of Newcastle’s Liberal Democrats, suggested that helping get flagship developments like the Gateshead Quays off the ground could be part of the “gamechanging” benefits from a visitor levy.
However, he added: “I take the point that when you have looked elsewhere a levy does not seem to deter people [from booking trips]. But I would be interested to know whether we are looking at places that already have established visitor economies and implement a levy at that point, or places like the North East that would be potentially introducing a visitor levy at the same time as trying to grow the visitor economy. Those are two very different concerns.”
