Key facts
- IHG's UK and Ireland managing director, Neetu Mistry, has directly warned the government against a proposed tourist tax.
- The tax could add over £100 to a two-week family holiday and result in 33,000 job losses in the tourism sector.
- IHG's investors have indicated that the tourist tax, combined with business rates, makes the UK hospitality market less attractive for investment.
- Local authorities in England will be able to implement visitor levies from April next year.
- The government stated the levy aims to reinvest in local communities and has had limited impact in other countries.
The boss of Premier Inn-owner IHG has urged Mayor Andy Burnham to drop plans for a tourist tax, warning it will deter visitors and investors from the UK.
Neetu Mistry, the hotel group’s UK and Ireland managing director, told City AM that the policy, which allows local authorities to charge a levy on overnight accommodations, is an "additional barrier stopping people making the most of stays in the UK." She added that similar levies in other countries have acted as a deterrent to tourism flow.
Trade body UK Hospitality estimates the overnight visitor levy could add more than £100 to the cost of a two-week family holiday and cause the loss of 33,000 tourism sector jobs. Mistry emphasized the desire to keep the UK attractive and affordable for tourists.
InterContinental Hotels Group (IHG), listed on the FTSE 100, operates 384 hotels in the UK. Mistry stated that IHG's franchisees and investors have expressed concerns that the tourist tax, alongside rising business rates, is making the UK's hospitality market less viable, making it harder to achieve a sensible return on investment.
The UK's first tourist tax was implemented in Edinburgh in July, and local authorities in England will be able to charge visitor levies from April next year. Mistry criticized the government for not providing clear plans for the tax and stated IHG continues to engage to minimize its impact.
IHG has seen a surge in office-to-hotel conversions, with 78% of new openings in the UK and Ireland this year being such conversions. A quarter of new rooms opened in London this year have been in the luxury sector, driven by corporate travel. Constructing hotels from old offices allows investors to scale quickly across different segments and markets.
A government spokesperson stated the levy will help ensure local people and economies keep more of the rewards and invest in their communities. They added that similar levies typically add a small amount per night and have a limited impact on visitor numbers and jobs, and that local leaders will consult their areas before introduction.