Hotel owners across the UK condemn Labour’s tourism tax hike branding it ‘English economic self-harm’ – as Brit holidaymakers face shut down businesses

The Overnight Visitor Levy Bill was unveiled in the King’s Speech yesterday, despite hotel owners and others in the industry opposing the proposals.

The plans also include giving local governments the power to charge a small fee in the form of a tourist tax for overnight stays.

This will apply to visitors staying in hotels, holiday homes, hostels and guesthouses.

The surcharge is expected to be five percent of accommodation costs and will be used to finance local infrastructure and tourism.

However, British hotel owners are not very happy with the situation.

Hugh and Steve Ridgway, co-owners of the St Moritz Hotel and Cowshed Spa in Cornwall, condemned the tax as ‘British economic self-harm’.

The duo argue that this shows a misunderstanding of how the tourism economy actually works.

Hugh Ridgway says: ‘Cornwall is the jewel in the crown of British tourism. ‘People travel from all over the world to stay here, eat here, spend here and support thousands of local jobs and businesses.’

Cornish emphasizes that those in the hospitality industry are ‘working almost to breaking point just to budget and break even’.

‘Margins are razor-thin, staff costs are rising, energy is unstable and consumer confidence is fragile,’ says the hotel owner. ‘And now Westminster thinks the answer is to tax visitors more.’

Ridgway describes the move as ‘the stuff of the asylum’s tourist economy’.

He adds: ‘My only hope is that we don’t have a ‘district mayor’ which wouldn’t technically apply. But who knows?

‘We are actually already unpaid tax collectors on behalf of the Government. We collect PAYE, National Insurance, Corporation Tax and VAT and pay Business Rates, Council Tax, pensions and endless regulatory costs. All while simultaneously trying to remain competitive internationally and domestically.

‘Now this economically illiterate Chancellor wants hotels and accommodation providers to be at the forefront of another politically expedient tax grab.’

New survey reveals one in five Brits would prefer not to book a holiday in the UK.

Commenting after the King’s Speech, Shadow chancellor Sir Mel Stride said the new family holiday tax would ‘be a blow to seaside towns and hit families hard in the pocket’ and that the Conservatives would oppose the new tax when Labor tabled it in Parliament at the next parliamentary session.

The couple are co-owners of the St Moritz Hotel and Cowshed Spa in Cornwall, pictured.

Meanwhile, Steve Ridgway, former CEO of Virgin Atlantic and former Chairman of Visit Britain, explains how he feels the government is ‘making sustainable domestic tourism more expensive and less competitive’.

UKHospitality warned the tax would cost 33,000 jobs and reduce tourism spending nationally by £1.8bn.

The pair say there is widespread opposition to the policy across the industry.

‘The government should support British tourism, reduce barriers to growth and recognize hospitality as one of the country’s most important employers,’ says Hugh Ridgway.

Small Business owners in Cornwall have previously said the holiday tax, which could add £100 to a two-week family stay, will be borne by business owners who do not want to pass the charge on to customers who are already struggling to get away.

Giles Fuchs, CEO of Burgh Island Hotel in Devon, also believes the tax will be detrimental to the tourism industry, describing it as ‘deeply worrying’.

‘Hotels have shown incredible resilience over the last few years; “Despite increasing economic pressures, it continues to invest in employment, tourism and local communities,” he says.

‘However, the introduction of a tourism tax is extremely worrying.’

The hotel boss highlights how the sector has had to contend with ‘rising energy costs linked to the Iran War and wider instability in the Middle East’, as well as ‘increasing business rates and rising staff and supply costs, hotels are being hit across the board’.

Fuchs adds: ‘Sometimes it feels like the hospitality industry has become Westminster’s pincushion.’

Burgh Island Hotel featured in the BBC drama Towards Zero and was the setting for many Agatha Christie books and film adaptations.

Fuchs continues: ‘The hospitality sector remains one of the UK’s most important industries, supporting millions of jobs and stimulating growth in regional economies.’

According to Fuchs, 64 percent of hospitality businesses expect to cut jobs due to rising costs.

Giles Fuchs, chief executive of the Burgh Island Hotel in Devon, also believes the tax will harm the tourism industry, describing it as ‘extremely worrying’

‘Adding another charge for overnight stays risks making UK holidays more expensive and creating a new barrier for local jobs, suppliers and businesses vital to regional tourism,’ he says.

‘This is particularly worrying for areas such as Devon and Cornwall, where tourism is the backbone of many local economies.’

Despite being one of the most visited parts of the UK – boasting beautiful beaches, tropical gardens and major attractions such as the Eden Project – Cornwall has seen its lucrative tourism sector suffer since the lockdown.

In the autumn, official tourism board Visit Cornwall went into voluntary liquidation, saying it faced ‘insurmountable financial difficulties’ and that visitor numbers had fallen by 12 per cent in 2024, rising slightly last year.

Skyrocketing rates, which began in Chancellor Rachel Reeves’ October budget, have left many small businesses in the sector on the brink; holiday tax is potentially the ‘nail in the coffin’ for those whose livelihoods depend on the busy summer season.

Labor increased the national living wage for people aged 21 and over to £12.71 per hour this month; An increase of 4.1 per cent which, along with increases in the minimum wage, national insurance contributions and the introduction of pension auto-enrolment, has left many Cornish business owners fearing bankruptcy.

Vanessa Clark, 52, who runs a restaurant called Indidog in Falmouth, said the tourism tax that could be introduced next year would corner small companies trying to survive after interest rate increases.

He told the Daily Mail: ‘This is disgraceful. Them [the Government] We expect accommodation providers to collect this tax, but ultimately it will be absorbed by them.’

Small business owners in Cornwall have previously said the holiday tax would likely be borne by the owners and they would not want to pass it on to customers who are already struggling to get away.

Hotels and hostels, desperate for tourists now hit by rising fuel prices and rising inflation, will feel obliged to collect the tax to encourage visitors to make the long journey west, Clark said.

In February, four bars closed on the same day, including the Golden Lion in Port Isaac, which was featured on TV show Doc Martin.

The Pityme Inn in St Minver, the London Inn in Padstow and The Lugger Inn in Polruan, all owned by The Cornish Inns group, were suddenly closed after the company’s co-manager Jason Black said there was “insufficient capital left to continue safely and responsibly”.

A month later, it was announced on Facebook that bars would reopen.

In March, popular Falmouth restaurant Hevva!, helmed by chef Will Johnson, announced it would close its doors, just weeks after being featured in the 2026 Michelin Guide.

While Johnson told customers on Instagram that ‘too good deals’ in London contributed to the closure of the popular restaurant, he acknowledged that ‘times are tough for restaurants and they’re getting tougher’.

Joby Godolphin, owner of B&B Storm in a Tea Cup in St Ives, Cornwall, said the holiday tax was ‘ridiculous’ and ‘should not exist’.

The 49-year-old business owner said: ‘The tourism tax is a nail in the coffin because the last thing we need is for people to feel like they’re being cheated.’

Alongside leisure tourism, Andrew Clarke, commercial director of the Business Travel Association, also argues that the tax is a ‘major concern for the business travel sector’.

Business Travel Association boss Andrew Clarke argues tax is ‘a major concern for the business travel industry too’

He adds: ‘Business travel and leisure tourism are two very different things and it is important that the distinction is not lost as these plans progress.

‘Whether business travelers are attending client meetings, visiting construction sites or traveling for training and events, they support jobs, investment and economic growth across the UK.’

Clarke expressed concern about ‘how costs can quickly escalate for businesses managing large travel programmes’.

It says: ‘Combined with existing VAT and wider travel costs, there is a risk of making business travel in the UK significantly more expensive and more complex to manage.

‘There is also a wider competition issue here. Many European cities with visitor tax operate at lower hotel VAT rates than the UK; However, these fees will exceed the current 20 percent VAT burden for hotels here.’

Clarke adds: ‘We call on the government to ensure that business travel is treated appropriately as legislation evolves, with a clear and consistent approach that recognizes the difference between discretionary tourism and business-essential travel.’

Concerns have previously been raised about how the tax could price working-class families out of holidays.

Butlin’s CEO John Hendry Pickup previously shared his views on Good Morning Britain on how expanding the UK tourist tax could impact families across Britain.

Butlin’s chief executive John Hendry Pickup, who has been in charge of the holiday park for three years, told ITV presenters Adil Ray and Ranvir Singh on Good Morning Britain that he felt the tax would ‘hit the people who can least afford it at the moment and I don’t think that’s fair’.

He explained how he sees it as a ‘UK tax on UK families going on holiday in the UK’, and that Butlin’s non-school breaks usually cost around £49 for four nights for a family of four.

But with a £2 per night surcharge, for example, this results in a ’66 per cent tax on those who can least afford it’.

As for the impact on Butlin’s, Hendry Pickup insisted “this will not make our business unsustainable, we are still fully booked at the moment”.

However, he stressed that the tax ‘makes it extremely difficult for people who come to spend time with us outside of school holidays’.