‘City Visitor Charge’ - will the Manchester ‘tourist tax’ benefit all?

How much?!

Mancunians are used to a little bit of incredulous shock at the cost of something when travelling abroad.

But now that Manchester itself is a tourist destination, the kinds of additional charges that are commonplace in Europe are arriving closer to home.

Like many things we do in the hotel association this is for the greater good of the city - we're hoping that the whole city will benefit from this

First to land has been the ‘City Visitor Charge’, otherwise known as the ‘tourist tax’, that was brought in from 1 April this year following a decision by most - but not all - hoteliers in the city centre.

Set by the Manchester Accommodation BID (business improvement district) the charge is £1 per room, per night, for any visitors staying in the 74 hotels within the city centre - broadly speaking, any lying within the steel embrace of the Mancunian Way and Trinity Way.

Part of the group leading the charge is Adrian Ellis (main image above), general manager of the five-star Lowry Hotel and Chair of the Manchester Hoteliers’ Association, who explained a bit about the charge and why he thinks it will benefit a city in the midst of a building boom.

“It’s a £1 levy which all 74 hotels collect and forms a big pot of money that over the five-year plan will cumulatively gain somewhere between 17 and 18 million pounds,” he said. “It’s big sum of money, and that will be spent mostly on getting new business into the city - conferences, events, new activities - and the hotel community will benefit from these activities and additional business.

Ellis continues: “All this is on the back of huge growth in supply, which is still going on. We're still growing from 10,000 rooms, which was the case in 2021, up to around 15,500 by 2026. The hotels, I think, needed to take the law into their own hands in terms of creating our own business and generating better occupancies for all the hotels in the years ahead, and there’s a good ten years ahead where demand will grow.”

Compared to the likes of Barcelona (now €2.75 per night), Berlin (5% of the net price of the accommodation) or Paris (up to €4 per night), what’s a quid?

Well it’s not insignificant, but Ellis argues that with visitor charges so commonplace in the desirable cities across Europe it is only a matter of time before it arrives in cities across the UK, Manchester is simply ahead of the game.

“We've modelled it on what you see in Europe,” said Ellis. “If you go to almost any city there, they all have their own equivalent, whether it’s €1, €4 or €5, and it goes towards the good of the city and for the hotels in that city to improve their tourism offer.

“I very much think that UK cities will follow suit. Other cities have already asked us how we planned it and go about it, so I would strongly suspect that by, let’s say 2030, the majority of cities here will be doing something similar. Guests will become used to the fact as it becomes commonplace in the UK.”

While there may seem little downside - pay £1 for the privilege of staying a night here, and a big pile of cash gets spent on improving the city for the next time you fly in - one hotel executive thought otherwise.

They wished to remain anonymous but explained that while it’s a worthy idea for a growing city, some hotels will feel the pinch more than others.

“Ultimately the aim is a good one,” they said. “Local government can't afford to fund tourist marketing and destination management, they just don't have the money. But there needs to be a cohesive, joined-up national strategy, not different cities doing their own thing. It's something that's needed, but it's been rushed through, and it's been done in such a way that no one's really thought about all these little intricacies.

“Let’s say you charge us all based on how the city averages, with Manchester at 80% occupancy, but my hotel is struggling and is only filling 60%, I’ll still get charged the same. For some hotels that’s not a problem, like maybe the Cow Hollow which has 18 rooms, but if you’re a massive hotel with 300 rooms that’s a big discrepancy.

“Or say you’ve filled all 300 rooms at £1 each a night, but only been charged for 80% occupancy, then you’ve made a profit on it. Ultimately, the way they’ve worked it out some hotels will make a profit, some hotels will recover the cost and some hotels will make a loss. How is that right?”

In response to this Adrian, in the unflappable manner of someone who runs a five-star hotel, agreed that some hotels would need to make up the money gap on unoccupied rooms, but that if they didn’t see an improvement that’s a failing on the part of the Manchester Accommodation BID.

“We tried to find something that’s fairest for all so we're using an Smith Research Reasearch (STR) model,” he said. “Which gives you the average occupancy of the hotels in the city and that's how we're going to be charging. In the short term there will be hotels who may have to pay the difference, so there will be some losers and there will be some winners. But hopefully those who are losing won't be sitting on 50% occupancy forever otherwise we're not doing our job. The whole purpose of this is to grow occupancy.

“We hope that by generating more occupancy it'll create a level playing field one in which all hotels are benefiting and their occupancy catches up. Of course there are going to be some issues as we go through detail and so on, but we hope that those ones that maybe lose out at the beginning will be able to bring up their occupancy through the increased business that we'll be providing through our initiatives. Like many things we do in the hotel association this is for the greater good of the city - we're hoping that the whole city will benefit from this.”

Whatever form these future benefits may take, hospitality representatives are concerned that in the meantime the money raised by this tax will be coming from the coffers of an industry that already shells out its fair share to No.11 Downing Street.

UKHospitality Chief Executive Kate Nicholls said: “Hospitality businesses already pay a high level of tax, funding vital public services at national and local levels, and there are a range of existing voluntary schemes to drive investment in people and place, such as Best Bar None and Purple Flag. These should always be explored first before imposing further taxes on a sector where £1 in every £3 goes back to the Exchequer.

“Tourism and accommodation Business Improvement Districts can have a role to fund local marketing and promotional activities, but there must be comprehensive local support and significant engagement with the business community before it is implemented. It’s also essential funds are ring-fenced for spend within the sector and not funding matters covered by general taxation.

“UKHospitality has been consistent that levies that are punitive, deter visitors or are incorrectly targeted are ineffective and should be avoided at all costs.”

With the boom of interest in Manchester ongoing, and buildings blooming across the city, all signs point to a further transformation in Mancunian life. But as with any great change, especially when there’s money at play, the question is always the same - who will end up footing the bill?  

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