Visitor levy causing 'major problems' for Edinburgh firms, body warns

Visitor levy causing 'major challenges' for Edinburgh firms, body warns.

Key points

• Earlier this week, Highland Council agreed to proceed with a public consultation on a tiered fixed amount visitor levy scheme.
• But there is still a major question around what that fee should actually be.How do we know £5 is the right figure?
• Edinburgh became the first city in Scotland to introduce the so-called tourist tax when it was implemented last month.
• He continued: When you multiply that throughout the number of bookings being created in Edinburgh, it becomes a significant cost.
• The fixed-fee approach is what we have been advocating and what we pushed for when the legislation was changed, Mr Crothall explained.

Visitor levy causing 'major challenges' for Edinburgh firms, body warns. Published 27th Aug 2026, 06: 00 BST. Updated 27th Aug 2026, 06: 01 BST.

Firms bearing 'significant cost' due to correction of bills, notes tourism business organisation.

Edinburgh's controversial visitor levy is causing "major problems" for firms and requires a "real time" analysis to determine if it is curbing spending throughout the city, the leading body for tourism and hospitality businesses in Scotland has cautioned.

Meanwhile, the Scottish Tourism Alliance (STA) remarked firms could be incurring millions of pounds worth of costs correcting bills due to the way in which the levy is calculated and associated difficulties with booking platforms.

It explained that staff are having to correct the individual bills of guests so as to remove non-accommodation charges, such as breakfasts, to arrive at a final amount from which the levy percentage is calculated.

Meanwhile, the "complexity" and extra work required to amend the bills is taking around eight minutes in some cases, the STA stated, and would result in a "significant cost" to tourism businesses.

For context, the alliance has called on other local authorities looking to introduce their own levy to learn from the challenges in Edinburgh, and stated any such rollout should follow a fixed-fee model rather than a percentage charge.

Edinburgh became the first city in Scotland to introduce the so-called tourist tax when it was implemented last month. The levy sees visitors staying overnight in hotels, bed and breakfasts and self-catering accommodation, charged an extra five per cent on top of their original booking cost.

Reports have suggested the levy has generated £5 million in revenue in its first month of operation, but a City of Edinburgh Council spokeswoman remarked it will not receive any levy funds until the first returns are due from 1 October. The levy is projected to raise around £45m to £50m a year by 2028/29, with the capital being reinvested directly into initiatives that benefit residents and enhance visitor experiences.

After administration and contingency costs, a fixed amount will be assigned to different areas, including £5m annually for housing and tourism mitigation, and funds for the likes of participatory budgeting, culture, heritage and events, and city operations and infrastructure.

But already the STA remarked it had been contacted by accommodation providers who have noted challenges implementing the percentage model and, in particular, how the levy is being handled by some booking platforms.

Marc Crothall, the STA's chief executive, remarked: We always knew there would be challenges with the percentage model and we are now starting to see some of those coming through. Calculating a percentage may seem simple, but the reality is causing major challenges for businesses.

"Some of the booking platforms are not yet set up to work with the percentage model properly and accurately remove non-accommodation elements from the final levy calculation, and that means businesses are having to go back and correct bills. That takes time, and it costs funds."

He continued: When you multiply that throughout the number of bookings being created in Edinburgh, it becomes a significant cost. This could run into millions of pounds, so we need to understand the true cost and whether the two per cent businesses can retain for administration comes anywhere close to covering it.

"The last thing we want is for a guest to obtain to the end of their stay and be presented with a bill which isn't accurate. It doesn't reflect well on the business, and it doesn't reflect well on Scotland as a visitor destination."

Earlier this week, Highland Council agreed to proceed with a public consultation on a tiered fixed amount visitor levy scheme. As part of its proposals, a £5 per room, per night visitor charge could be brought in for stays in hotels, B&Bs and short-term lets, with a £2 per night charge for hostels and campsites.

Accommodation providers would retain five per cent of the levy collected to support cover administration costs, a step that the STA has welcomed.

The fixed-fee approach is what we have been advocating and what we pushed for when the legislation was changed, Mr Crothall explained. It is simpler and, importantly, we know the booking platforms can accommodate it.

"But there is still a major question around what that fee should actually be.How do we know £5 is the right figure? Could it be £3? What impact will it have on bookings and jobs?"

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For context, the STA additionally wants the emerging impact of the Edinburgh levy on wider visitor spending to be measured.

Mr Crothall continued: We need to know what happens to the rest of a visitor's spend when they are paying the levy. Are they spending less when they go out for dinner? Are they spending less in shops and attractions? Are they shortening their stay? Are they booking fewer Fringe demonstrates?

"We need real-time information to get a true picture of whether the money raised from a visitor levy outweighs the negative impact on the wider visitor economy."

In practice, the City of Edinburgh Council leader, Jane Meagher, remarked the levy had been "many years in the making, " with the council listening to and taking into account the views of residents, industry, and other stakeholders.

"In surveys we undertook pre-legislation, we asked whether preference would be for a flat-rate, or a percentage-based fee, and the majority of respondents had a preference for a percentage fee as this was seen as the fairer option meaning visitors could pay a levy in proportion to their accommodation costs, " she remarked.

"We're in ongoing and active dialogue with accommodation providers as we have been throughout. We want to hear their views one month into the visitor levy being introduced and are committed to addressing reservations. We are the first local authority in the UK to introduce a levy on overnight stays and naturally there will be lessons we can learn."

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Taken together, the developments around visitor levy causing ' major problems' for Edinburgh firms, body warns point to a situation that is still moving, and the coming days should bring more clarity.