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December 10, 2019updated 25 Apr 2022 4:29pm

Tourist tax rises – will small hoteliers feel the crunch?

By Globaldata Travel and Tourism

The rise of the tourist tax illustrates that many destinations do not want visitor numbers to decrease.

However, mass tourism shows no sign of stagnation with international arrivals reaching 1.4 billion in 2018.

Local authorities in many tourism hotspots around the globe have introduced an official tourist tax in recent times. This has done little to curb the phenomenon of over-tourism. Instead, added taxation is putting increasing strain on local and independent hotel owners.

The root cause is constantly overlooked

An integral factor behind the rationale of taxing visitors is that it raises funds. These can be used to offset some of the negative impacts of over-tourism.

This reasoning is reactive, not proactive. To reduce the negative impacts of tourism, destinations need to cap the number of tourists entering a destination. Alternatively, they can introduce high-value taxes. These will have a genuine impact on-demand flows, significantly decreasing the number of tourists travelling to a destination.

This is because if someone is considering buying a holiday, a small extra cost is unlikely to deter them from travelling.

Who benefits from a tourist tax?

An extreme and positive example is Bhutan. The Buddhist Kingdom charges tourists a fee of $200 per day between December and February. This figure increases to $250 for the rest of the year.

This fee will slow demand flows to Bhutan and filters out tourists that may create a negative impact on the destination.

Destinations such as Venice have introduced fees that highlight the fact that tourism ministers may not want visitation figures to decrease.

Plans to charge tourists an entry fee of $3.30 for short stays, with the amount rising to a maximum of $11.10 within three years has been introduced.

Questions still remain regarding how the destination will enforce this fee. Also, what the tax income will actually be spent on to improve the lives of local people affected by mass tourism.

Hotels left high and dry

Taxation tends to be aimed at the hotel and accommodation sector when many other sectors assist in the encouragement of mass tourism to a destination.

The lodging sector is already a highly taxed environment. The growing pressure destinations face to introduce or increase tourist taxes may create an increase in small scale hotel closures.

These independent operators may face a decrease in room occupancy due to a rise in the room rate from these taxes.

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