Want To Increase Cultural Investment? Use Tourism Taxes

The taxes levied on overnight stays could fund much more than convention centres and marketing campaigns. They can make places more vibrant, inclusive and worth visiting.

From Saturday, April 1, everyone staying in Manchester will have £1 GBP added to their hotel stay per night. The tourist tax is a first for the U.K. and is hoping to raise north of £3 million GBP per year to invest in the city’s visitor experience. This tax, often referred to as a hotel occupancy tax or ‘heads in beds’ tax, is nothing new. It is a common occurrence around the world, especially in the United States, Canada and continental Europe. £1 GBP is modest. In New York City, a $1.50 USD ‘Javitt’s Tax’ and $2.00 ‘room tax’ was added to my hotel bill each night, on top of a 14% state and city room fee. This is becoming the case not only to stay in hotels, but also to enter countries. Europeans and other nationalities will soon pay a $21 visitor promotion tax to enter the United States, as the ESTA is increasing its cost by 50%. Venice is charging upwards of €10 euros to enter depending on the size of the group. Canada’s electronic travel authorisation, or ETA, is $7 CAD. The United Kingdom, by and large, is late to the party. And this tax is for participating hotels and accommodation providers, in one city.

Similar to charges added to concert and plane tickets, there is often little public consultation in how these fees are decided and what purpose they are used for. While some fees are hotly debated, such as high value concert tickets to arena and stadium shows, these hidden in plain sight taxes levied on hotels and accommodation providers are attached with little debate. With Manchester, the fee would cover investing in visitor experience and events, but what this means has yet to be singularly defined. Moreover, the fee – managed by a new business improvement association – is voluntary and not universally supported: hospitality businesses argue it is excessive in addition to sales tax, alcohol duty and VAT. But what’s often missing from this conversation is one of the main reasons to visit – music, food, art, culture and entertainment. Utilising this revenue to support these sectors, often the ones that leave the most lasting impression, is often absent.

If a community’s food culture is one of its main tourist draws, why couldn’t a development kitchen be a recipient of hotel tax revenue to better safeguard that offer? Or in the case of music, artists who play arenas mostly begin in smaller venues, so a holistic approach to supporting smaller and more mid-sized venues could also be worth exploring.

But this is rarely the case. If it is a hotel tax, it most often gets allocated to promoting the place and its convention center, including facility development, maintenance, financing or promotion. Take Lancaster County in Pennsylvania, for example. Here, a 5% tax is levied on each room night. For every $5 fee levied on a $100 room, $1.10 is earmarked for Discover Lancaster, its tourism board. The other $3.90 is split: 80%, or $3.12 goes to the convention center authority and the final 20%, or 78 cents, goes back to the tourism board. The two main beneficiaries in Lancaster are its tourism board and the convention center.

How many guests visit Lancaster and never set foot in its convention center, or whose formative experience in Lancaster involves other experiences, such seeing live music, visiting a gallery, having a terrific meal or taking in a theatrical performance? And for those attending business conferences, how many venues, galleries, bars and restaurants are patroned? Yet, investing in these sectors are not included. In New York City, Javitt’s Convention Center may be important, but does it draw as many tourists as Broadway or the city’s many museums? There are examples where this is changing, but it is the exception. Austin, Texas is one such outlier. It is redeveloping its convention center and, through a city council vote, decided to allocate 15% of an additional .2c tax on rooms to a new music fund, raising over $3 million.

If funds generated by tourists could be reimagined to support all the reasons people visit a place, it will create more culture, creativity and importantly, jobs across all communities, including Lancaster and New York City. Culture – and all its variety – is at the core of what makes a place worth visiting. How many folks returned from a trip waxing lyrical, solely, about its convention centre, or stated that the reason they visited was the slogan the tourism board concocted. Both play a role, but there are other stakeholders alongside feeding, entertaining and engaging visitors night in, night out.

Manchester has a lot of priorities this modest tax could be used for. Let’s hope supporting the city’s expansive music, food, art and culture are at the top of list, alongside its convention centres and marketing strategy and sooner than later, this becomes the norm everywhere.