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June 17, 2021updated 25 Apr 2022 1:36pm

Potential Welsh tourism tax could be beneficial if designed for the long term

Tourism tax with a long-term view can help Wales benefit from more investment through the boost in domestic tourism, especially in light of Covid-19.

By Globaldata Travel and Tourism

In the recent five-year plan set out by its government, Wales could see a tourism tax implemented. This would be beneficial for the destination as it will allow for greater investment in facilities and will increase Wales’ ability to improve touristic experiences. However, it should be introduced with a long-term view to maintain visitation figures in years to come.

Increased domestic visits will ensure the success of tourism tax

Fluctuating rules on international travel restrictions have caused many Brits to abandon an international holiday for 2021. 43% of respondents in a live Verdict Community Survey* said they would consider domestic trips in the next 12 months. This sentiment is likely to carry on after 2021 due to the prolonged implications of the coronavirus pandemic. Travellers are desperate to take a trip this year and will look to domestic destination markets to do so.

The desperation to travel this year leaves an opportunity for Welsh tourism businesses to exploit an increase in domestic visitation. Price increases for holiday elements such as accommodation, entertainment and food service could be unlikely to deter the willing UK traveller from visiting in 2021. This potential price increase could be a good indication of whether tourism taxes will be effective when implemented.

The boom in domestic travel may see increased dependence on existing tourism facilities, meaning some hotspot destinations may suffer from overtourism during peak times. This signifies the need for extra funding for these and new facilities such as car parks and leisure amenities that would be funded by the potential Welsh tourism tax. These improved facilities could lead to greater enjoyment whilst on-trip and could result in repeat visitation, which is important for destinations that rely on mainly domestic visitors. However, taxes that are too high could make the trip unaffordable and deter the traveller from repeat visits.

Tourism taxes should be implemented with a long-term view

Whilst some individuals are willing to travel whatever the cost, this is not the situation for all as some travellers have been hit harder financially by the pandemic. According to a live Verdict community survey**, when asked how future holiday budgets have changed due to the pandemic, 36% of respondents said they ‘cannot afford to go on holiday in the near future,’ with 16% of respondents stating their budgets are the less than pre-Covid-19.

The tourism tax should be designed for the long-term, as the ‘staycation boom’ may diminish from 2022 or 2023 when international restrictions on travel are possibly less complicated. In line with this reduced demand and to maximise taxation revenue, the tourism tax should be aimed at travellers who visit for day trips and not solely aimed at those who stay overnight. Overnight visitors will spend more during a trip, thus creating more value for Wales and will probably have a higher chance of returning due to spending more time at the destination. Although the tourism tax is not a done deal, it could be highly beneficial for Welsh tourism if done correctly and over the long term.

* Verdict community survey, live since 17th November 2020 with 1,341 respondents.

** Verdict community survey, live since 19th May 2021 with 121 respondents.

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