An Aberdeen visitor levy could 'raise £1.6m a year' by 2027

Aberdeen could introduce a visitor levy by the start of 2027, to potentially raise around £1.6 million for straining city coffers every year.

Councils across Scotland were last month given the power to introduce visitor levies, a tax on overnights stays in accommodation.

Councillors in Aberdeen have now agreed to press ahead with the so-called tourist tax here, with a final decision yet to be made.

But leading hoteliers are concerned the “inevitable” introduction of the toll could risk losing the Granite City’s affordable edge over competitors in the Central Belt.

In this article, we reveal:

How much will the Aberdeen visitor levy add to hotel bills?
A leading hotelier’s concerns the visitor levy could lose Aberdeen its budget-friendly edge over other Scottish cities
How the council doesn’t have the best idea of the city’s hotel room stock
And just how much it might cost local businesses – and the public purse – to bring in the visitor levy in Aberdeen

What does the visitor levy work?

Visitor levies are a common surcharge across the world.

If you’ve travelled to Paris, Berlin, Vancouver, New York, Barcelona, Amsterdam or Rome in recent years, it’s likely a tourist tax has been added to your bill.

And in the UK, Manchester imposed a £1-a-night tourism levy on city centre hotel rooms this April in order to fund its business improvement district for the next five years.

Seating along the River Seine, Paris, in place for Olympic Games 2024. The French capital is one of many international destinations to have introduced a visitor levy. Image: Mike Egerton/PA Wire

In 2022, Edinburgh was the first of Scotland’s councils to approve plans for such a charge, setting the rate at £2 per person, per night.

Each Scottish council can set different rates, to be calculated as a percentage of the cost to stay in hotels, bed and breakfasts, hostels, guest houses, self-catering accommodation, camping sites, caravan parks in their area.

Aberdeen and the Highlands look to be following Edinburgh City Council closely, debating if and when to introduce a visitor levy – and how much to charge.

How much would Aberdeen’s visitor levy be and how would the money be used?

Aberdeen City Council’s calculations are based on a 1.5% addition to accommodation bills.

In a report briefing councillors, city development and regeneration chief Julie Wood revealed, had that levy been in place in 2023, it would have raised around £1.6m for the council.

Tourists on the Aberdeen University campus in old Aberdeen. Image: Kami Thomson/DC Thomson

This £1.6m figure – before considering administration costs – was calculated using commercial data on occupancy rates, average daily rates and the number of rooms available in Aberdeen.

But before introducing an Aberdeen visitor levy, the local authority would carry out its own survey on room availability to have the best idea of what revenue they might be able to raise.

“The council hasn’t carried out a audit of all available rooms in the city in recent
years,” Ms Wood admits.

The chief officer also pledged to ensure the cash would be used to promote Aberdeen as a tourist destination.

Ideas on how to do that include marketing campaigns, support for international and national events, cultural development and investment in new tourism infrastructure.

Top hotelier: ‘Aberdeen visitor levy is inevitable – so we want to help shape it’

Ms Wood promising a survey and to spend the money on the visitor economy may well allay some of the fears of Frank Whitaker.

Chairman of the Aberdeen City and Shire Hotels Association, he’s been a prominent voice for the industry as the Visitor Levy Bill went through the Scottish Parliament.

Chairman of the Aberdeen City and Shire Hotels Association Frank Whitaker is warning that Aberdeen can't lose its affordable edge when the visitor levy "inevitably" comes in. Image: Darrell Benns/DC Thomson — Chairman of the Aberdeen City and Shire Hotels Association Frank Whitaker is warning that Aberdeen can’t lose its affordable edge when the visitor levy “inevitably” comes in. Image: Darrell Benns/DC Thomson

He’s keen to ensure money raised makes its way back to those being asked to administer the charge – and should not be used on core council services like “filling in potholes”.

“The visitor levy is an inevitability,” he adds.

“It’s to do with local authority funding and the Scottish Government recognising that councils will find things even more challenging without being able to raise tax locally.

“So, if it’s inevitable, we want to work with Aberdeen and Aberdeenshire councils to ensure the money raised is invested in the visitor economy.”

Warning: ‘Aberdeen visitor levy can’t cost city its edge’

Mr Whitaker, general manager of the Park Inn by Radisson Aberdeen, does still have concerns about the rate of the visitor levy in Aberdeen.

While it’s an easier sell to gelato-licking, bratwurst-chomping tourists on the continent, there the average VAT burden on accommodation is far less.

Tourists taking in the sights of Berlin are already subject to a visitor levy on their accommodation bills. Image: Wilfried Wirth/Imagebroker/Shutterstock

He adds: “A lot of people would say: ‘We go to Rome or Berlin and pay a visitor levy and it’s not too much’.

“But actually, the basket of taxes in those places is significantly less than in the UK with our 20% VAT rate.

“We have to be very careful we don’t turn Aberdeen and Aberdeenshire into unaffordable destinations.

“They are certainly affordable just now – especially compared to Edinburgh and Glasgow – so we have to be careful not to lose that.”

Tourists enjoying entertainment on the Royal Mile during the Edinburgh Fringe Festival. Image: Shutterstock

Mr Whitaker is yet to hear from council chiefs on their specific plans for an Aberdeen visitor levy, but is due to meet them next month to discuss the issue.

With Tall Ships and a north-east tourist boom, why wait until 2027?

On Wednesday, councillors paved the way for Ms Wood to launch talks with key figures on how the Aberdeen visitor levy might be brought in.

Once the plans are formed, they’ll go out to wider public consultation over the winter months.

That highly publicised engagement process will cost between £10,000 and £20,000.

A fireworks display over Aberdeen harbour when the Tall Ships came to the city in July 1997. Image: DC Thomson

With a better idea of how it would work and how much it might raise, a final decision will be taken on whether to introduce the tourist tax in Aberdeen by next June.

If it’s backed, an 18-month run-in would likely begin next July, allowing accommodation venues the chance to kit themselves out to administer the charge.

That would take Aberdeen City Council to January 1 2027 before starting to rake in any income from the visitor levy.

And it would mean missing out on a predicted tourism boom over the next few years, including when the Tall Ships come to Aberdeen in 2025.

How much would an Aberdeen visitor levy cost the city and its businesses?

It’s unclear how much it might cost to bring the surcharge to the Granite City, with hopes of a Scotland-wide digital platform reducing administration costs.

“Broad brush” indicative one-off set up costs for businesses, based on international tourist destinations, are estimated at anywhere between £150 and £7,000.

Aberdeen's Marischal Street is a sea of people as sightseers throng towards the harbour and the Tall Ships attractions in 1991. Image: DC Thomson — Aberdeen’s Marischal Street is a sea of people as sightseers throng towards the harbour and the Tall Ships attractions in 1991. Image: DC Thomson

Annual administration costs might be in the £200 to £850 range.

At the council’s end, setting up the Aberdeen visitor levy might cost between £100,000 and £460,000.

Running the scheme could cost somewhere between £145,000 and £245,000 a year.

So for anyone keeping count, that means in the first year of the visitor levy Aberdeen City Council may make only just more than half of its predicted £1.6m windfall.

Officials recommend, councillors decide… So what might Aberdeen City Council do?

Councillors will next June have the final say on whether to bring in the visitor levy after a lot of consultation with the hotel and accommodation sector and the public.

But they will firstly have to green light the idea this week.

The SNP and Liberal Democrats run the council, and SNP finance convener Alex McLellan is already talking like the £20,000 consultation is a sure thing.

Finance convener Alex McLellan is keen to hear what the hotel sector and public think of the possibility of an Aberdeen visitor levy. Image: Wullie Marr/DC Thomson

He told The P&J: “I welcome the powers given to Aberdeen City Council through the Visitor Levy (Scotland) Act 2024.

“Consultation will provide a valuable opportunity to hear the views of partners and stakeholders, including the hotel industry, around any potential scheme.

“There are a number of cities across Europe who already have a visitor levy, and Edinburgh has been clear on plans to introduce a scheme. So it is certainly a possibility for Aberdeen.

“The key factor is how additional income generated could be spent on the cultural and tourism offering within the city.”