Aberdeen 'gambles' as it approves Scotland's highest tourist tax - bigger than Edinburgh or Glasgow

The north-east city has agreed a 7 per cent levy on each overnight stay in the city’s hotels, bed and breakfasts and self catering apartments. The uplift compares to a 5 per cent rate now agreed in both Edinburgh and Glasgow and under consideration in the Highland council area.

A spokesman for Aberdeen City Council said people could expect to pay an extra £4.90 on the average price of a hotel room, said to be £70. At this price, the levy is expected to generate up to £6.8 million a year for the city.

However, with hotel rooms in high demand during energy conferences held at various points of the year, the cost of the levy will likely be significantly higher for visitors.

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The Federation of Small Businesses (FSB) Scotland said the 7 per cent charge would be among the highest in Europe. The organisation described the move as a “gamble” with Aberdeen’s reputation as a visitor destination.

Mike Duncan, the FSB North Scotland development manager, said: “Aberdeen’s levy implementation process must be handled with extreme care. It has the potential to raise vital funds to support the local tourism industry and enhance the area as a destination, which would benefit visitors, tourism businesses and residents alike.

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“However, one size most definitely does not fit all. Research suggests some so-called tourist taxes can deter visitors and negatively affect the local economy. What works for Paris or Barcelona, for example, might be very different to what works for Aberdeen.

“Aberdeen’s businesses deserve greater clarity on the levy’s likely effects.”

The tourist tax in Barcelona has recently been raised to €15 a night [£13.11] and in Paris the tax varies depending on the type of accommodation. Charges range from €0.65 for a basic campsite to €15.60 [£13.63] for a palace. For a four-star hotel, the tax is €8.45 [£7.38].

Mr Duncan called for a new Aberdeen-specific impact assessment to provide a clearer understanding of the potential impact of the tax.

The organisation has also highlighted a recent impact assessment commissioned by the Welsh Government, which found a visitor levy could reduce tourist numbers by up to 2.5 per cent and cut visitor spending by as much as £35m a year.

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Mr Duncan raised concerns about the disproportionate impact on the city’s smallest accommodation providers, such as some guesthouses and B&Bs.

He said: “What is surprising is that the council has chosen at this stage not to support the smallest, most vulnerable accommodation providers in the city by not exempting those below the VAT threshold. Non-VAT registered accommodation providers will be disproportionately impacted by this decision.”

Councillor Alex McLellan, Aberdeen’s finance and resources convener, said the levy would provide a “huge boost” to the local economy and allow investment in bringing major events and conferences to the city on a more regular basis.

He said: “Across Europe, we are paying similar amounts to stay per night subsidising their thriving economies, and we should do the same to ensure we can compete in terms of attracting both business and leisure tourism to Aberdeen.”

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The council said money raised would go towards projects including a new Convention Bureau-managed fund to attract one-off and repeat business events, expos and major conferences. More funds will go into a culture and events fund to attract more business to the P&J Live venue.

The tourist tax will also channel funds towards larger creative organisations in the city to support new work from emerging local talent.

Steven Gow, chair of VisitAberdeenshire, said: “A well-managed scheme that supports the aims of the region’s Destination Strategy will drive continued growth of Aberdeen’s visitor eonomy.

“Aberdeen welcomed 2.2m overnight visits in 2024, contributing to an economic impact from tourism of over £500m. The headroom for growth in the leisure and conference sectors will be fulfilled through effective investment in promotion, events and development of the tourism sector.”

Councils have been given powers to introduce a visitor levy by the Scottish Government, with the local authority given the discretion to set what the rate is for its region.

The Visitor Levy (Scotland) Bill allows local authorities in Scotland to charge a fee on overnight stays in some types of accommodation. The levy would be calculated as a percentage of the chargeable transaction for accommodation, after deducting any commission costs.

Local authorities set different rates for different purposes or areas. This means different rates can be set for particular events, such as arts festivals or special conferences, and that local authorities can vary the area in which the levy applies within their boundary.

Cruise ships and motor homes are not subject to the levy.

Edinburgh will become the first location in Scotland to charge a tourist tax, with the levy to be in place in time for next year’s festival season.

Glasgow separately approved a tourist tax in June, with the levy due to be introduced on January, 25, 2027. It is expected the fee could bring in about £16m annually for Glasgow after costs.