From Amsterdam to Zurich and many places in-between, tourist taxes are par for the course in Europe.  Long accepted as a very minor footnote to many a continental holiday, they haven’t traditionally had much traction in the United Kingdom — that is, until now.  As of 1 April, Manchester became the first British city to levy what has been widely referred to as a “tourist tax” on its visitors.  Hailed in some quarters, met with queries and concerns in others, it’s time to explore what the landmark implementation of this tax means for Manchester and — more importantly — what it could mean for other destinations around the UK and their visitors.

Not a tourism tax in the conventional sense

Let’s be clear: strictly speaking, the £1 charge introduced in April on overnight visitors staying in Manchester’s city centre hotels and short-term lets is not a tourist tax — at least not in the conventional sense.  As the think tank Centre for Cities clarifies, at present, many urban authorities in Europe can directly levy and collect tax.  However, UK cities have no such powers and so, in a move to overcome this, Manchester’s Accommodation Business Improvement District or Accommodation BID — an initiative comprised of Manchester Hoteliers’ Association,  Marketing Manchester, CityCo, and both Salford and Manchester councils — has introduced a fund-raising mechanism, formally called the City Visitor Charge.  The charge will apply to 73 separate hotels and serviced apartments that fall inside of the Manchester Accommodation BID zone and, collectively, the funds will be used for a whole host of improvements.

The idea is that the revenue from the City Visitor Charge will be used to improve the overall visitor experience while simultaneously attracting new staying guests into the city.  Specifically, monies from the charge — which are expected to amount to £3 million annually — will go towards an increase in marketing campaigns to drive overnight stays, the securing of large-scale conferences and events, attracting low-season events to the city, and street cleansing.  The overall goal is the long-term improvement of the guest experience in Manchester and it is hoped that the City Visitor Charge will serve as a mechanism by which to future-proof the area’s accommodation sector and visitor economy while ensuring that Manchester’s tourism sector is competitive at a global level.  Commenting on the launch of the initiative in March, Board Chair Annie Brown said, “The Manchester Accommodation BID will create a more sustainable and thriving sector, helping to bring visitors from around the world to experience the best of what Manchester and Salford have to offer.”

The pros, the cons, and the future-proof city

At its core, the introduction of the City Visitor Charge is a neat solution to a wider problem currently faced by DMOs around the UK: a post-pandemic shortfall in funding.  The idea is that, by creating a pot of money that can be spent to attract new visitors and bring new business to the city, Manchester can more easily cultivate a thriving visitor economy — at least in the short-term.  By attracting new overnight visitors to the city — who will be liable to pay the charge — the thought is that this fee not only raises additional revenue for local areas, but allows them to meet any extra costs without the pressure on limited DMO funding.

Despite the elegance of Manchester’s solution, there are concerns that — if the tax is deemed to be too substantial — it may act as a deterrent to inbound overnight visitors.  On the back of this, some have raised worries that the levying of this kind of fee could reduce greater economic activity within the area while cutting other revenue streams. There are also concerns that this sort of charge could, in fact, supersede or even interfere with the wider work of DMOs, which rely on taxes from local businesses and accommodation for their funds. In Manchester, the set up of the Accommodation BID is part of the wider DMO ecosystem in the city, working alongside its existing business improvement district (BID) and DMO organisations to provide support.

While the true impact of Manchester’s City Visitor Charge won’t be known for some time, from a wider perspective, it makes sense to view the implementation of this fee as part of a much greater future-proofing process — a path that may or may not be followed by other destinations around the UK.  After all — similar to the recent launch of the VivaCITY Challenge — Manchester’s City Visitor Charge is really simply all about ensuring that the city itself exists as a sustainable entity for the generations to come.