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April 20, 2022

Welsh authorities should focus on recovery rather than introducing tourist tax

While tourism tax is common throughout Europe and North America, the timing from Welsh authorities appears to be off.

By Globaldata Travel and Tourism

With Wales proposing to introduce a tourism tax in autumn 2022, some reports suggest that travellers could boycott holidays in the region in the future, disrupting the overall recovery of the UK travel industry.

While tourism tax is common throughout Europe and North America, the timing from Welsh authorities appears to be off, as domestic tourism has been showing strong signs of some much-needed growth this year. Domestic travellers from England, Northern Ireland, and Scotland will be expected to pay. As such, local tourism businesses have expressed concern, alongside travellers, due to the rising living costs already threatening recovery.

Proposals are working against UK consumer sentiment

The announcement comes at a time at which tourism is showing some positive signs of recovery in the UK, particularly the staycation market. According to a GlobalData Q3 2021 Global Consumer Survey, 48% of UK respondents said affordability was the leading motivation for booking holidays. This sentiment is likely to increase further in 2022 due to increased living costs and the current energy crisis gripping households across Britain. Yet many British travellers are still prepared to take a domestic holiday. In a recent GlobalData poll from January 2022, 43.2% of UK respondents said they would consider taking a domestic trip this year*. However, the tourist tax levy in Wales could now act as a deterrent, or force would-be travellers to consider alternative destinations.

Should the tax levy go ahead in autumn 2022, initial projections for Welsh domestic tourism could fall. According to GlobalData’s Tourism Demands and Flows Database, domestic trips to Wales were expected to reach 12.6 million this year, exceeding pre-pandemic levels. The tax levy could threaten such a performance. Despite avoiding the summer peak, November and October are still popular times of year for tourism. In 2019, November was the third most popular month for domestic travel in the UK, followed by October in sixth position. This is motivated by the lower cost of travel and ties in with half term at many schools across the UK. As a result, families with children are likely to be hit the most, as tourist tax is often applied per-guest.

Other UK nations could follow suit, but timing is essential

Other nations within the UK could follow suit, with some local authorities under pressure to tackle sustainability issues and the redevelopment of tourist destinations facing decline. It is important to note that tourism tax is nothing new and is common throughout North America and the EU. Popular destinations for UK outbound travellers who have been levying a tourism tax for many years include regions in France and Spain, so it is critical for affected tourism companies not to panic just yet. Still, UK authorities play an essential role in ensuring this does not happen. Once inflation in the UK stabilises, tourists are likely to be more accepting of the tourism tax. Ultimately, applying anything like this now seems counter-productive.

If other authorities in the UK wish to replicate these measures, timing will be of paramount importance. The current focus now should be recovery, as this will save tax paying business and increase in-destination spending. This strategy will allow destinations to get back on an even-footing to pre-pandemic levels and put them in a stronger position to invest in their product which will tackle the potential backlash from tourists.

*GlobalData Poll, closed January 2022- 347 UK respondents

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