Senedd Cymru | Welsh Parliament
Y Pwyllgor Cyllid | Finance Committee
Bil Llety Ymwelwyr (Cofrestr ac Ardoll) Etc. (Cymru) | Visitor Accommodation (Register and Levy) Etc. (Wales) Bill
Ymateb gan Expedia Group | Evidence from Expedia Group
(We would be grateful if you could keep your answer to around 500 words).
Expedia Group operates in multiple jurisdictions around the world that have introduced tourism taxes. We do not necessarily oppose the introduction of these taxes and believe that if implemented well, they can provide new income streams for Governments to invest in services and infrastructure that support tourists and citizens alike. In that way, aside from the concerns we set out below, the Bill appears to broadly fulfil the stated objectives and we commend the Welsh Government on its engagement with the industry during the process of consultation and drafting. In our view, there are many ways in which the proposal follows the best practices for implementing tourism taxes.
However, the most well-functioning tourism taxes are generally those which are simplest to implement. We note that in the case of Wales, while the national “per person, per night” model appears to achieve simplicity, the last-minute addition of the ability of local councils to charge a “premium” threatens to run counter to the stated objective to promote sustainable tourism. The “premium” was not consulted on as part of the Bill’s development and we are concerned that it could lead to certain local authorities introducing a high tax rate for overnight visits without the oversight of the Welsh Government or any significant checks to measure how this will impact the success of tourism in Wales more generally. This of course also runs counter to the stated objective of ensuring a more “even share” of costs to fund local services, as some local authorities will have much higher rates than others.
We also draw attention to our comments regarding the registration requirement in answer to Question 7, which also have relevance for the objective to promote sustainable tourism.
The Regulatory Impact Assessment is set out in Part 2 of the Explanatory Memorandum (https://senedd.wales/media/g5ipwvwh/pri-ld16812-em-e.pdf). This includes the Welsh Government’s assessments of the financial and other impacts of the Bill and its implementation.
(We would be grateful if you could keep your answer to around 500 words).
We have identified two potential barriers that we would be grateful for the Committee would consider:
First - as mentioned above, we are very concerned about the late introduction of a power for local authorities to charge a “premium” to the nationally set visitor levy rates. This creates complexity and has the potential to harm the visitor economy. Neither of these points have been reflected in the explanatory memorandum or the regulatory impact assessment. Officials, when asked, highlight that a local authority could not introduce a “premium” to the headline rate from the start of a visitor levy being introduced and that the local authority would need to consult locally on the proposed premium before introducing it. However, this does not provide the kind of check or balance that the industry believes is necessary. One of the strengths of the Welsh Government’s approach has been to recognise that the best tourism taxes are consistent nationally and simple to understand / implement. The introduction of “premiums” runs counter to this as within a few years (potentially as soon as 18 months from the Bill’s passing, given implementation timelines), we could see multiple different rates in different local authorities across Wales. These could change as often as every six months, according to the process set out in the Bill. This is not the stable and consistent tourism tax policy that the Government seems to have intended and which was consulted on. Having to track different rates in different areas, that are subject to change increases the burden on tourism businesses significantly and means that areas could quite quickly come to discourage tourism with punitively high rates.
There is also no in-built check whereby the Welsh Government must assess any potential “premium” against its tourism strategy for the whole of Wales. The national strategy must and should be balanced against the views of local authorities. This appears to be a concerning oversight. We acknowledge that the Welsh Government has the power to set a maximum “premium” that can be applied, but this does not solve the issue of the policy creating a complex patchwork of different rates and inevitably a cap could only be implemented after significant “premiums” have already been applied in various areas. We would therefore ask for the “premium” power to be removed from the legislation (Part 3, Chapter 1, Section 14) as it was not consulted on with industry and changes the fundamental character of the legislation.
Secondly - learning from the introduction of tourism taxes in Scotland, there needs to be early confirmation that the levy is only chargeable on bookings once the tax is in force after the 12 month implementation period. In Scotland, there is confusion because even though their levy policy includes an 18 month implementation period, property owners are expected to collect the tax from eligible bookings as soon as the intention to implement the levy is confirmed. For example, in Edinburgh, the Council is likely to confirm a visitor levy in late-January 2025 and after the required 18 month implementation period this levy will take effect on any stays taking place from mid-July 2026. However, in practice, the accommodation sector must be ready to collect on the same date as the intention to introduce the tax is confirmed, in order to immediately collect the tax in respect of bookings made in Jan 2025 for stays after mid-July 2026. This is causing concern in the sector, particularly among tour operators and those who take bookings from international travellers who are likely to book far in advance. The Welsh levy includes a commendable 12 month implementation period but it is important that the levy is only chargeable on bookings and stays after this period has elapsed. This ensures the implementation period is meaningful and the industry has time to make the necessary adjustments.
(We would be grateful if you could keep your answer to around 500 words).
We would highlight the two concerns we raise above, as these are both a barrier to successful implementation of the Bill and highlight significant unintended consequences for the tourism sector and the businesses within it.
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The impact assessments do not mention or attempt to quantify the impact of the Bill on booking platforms or larger property managers with automated booking systems that need to integrate the tax.
The introduction of any tourism tax necessitates changes to booking systems. Under the UK’s Consumer Rights Act 2015 and the Consumer Protection from Unfair Trading Regulations 2008 (confirmed in the recent Digital Markets Consumers and Competition Act 2024), booking platforms are required to display the total price of any good or services inclusive of taxes.
Given the number of properties listed on online travel agents’ websites, this process must be automated. The complexity of the tourism tax is therefore directly related to the ease (or difficulty) of meeting the display requirements. These requirements apply to booking platforms and any other place where an accommodation service is listed. A single rate of tax, applied nationally on all bookings is reasonably straightforward to implement, whereas multiple different rates, subject to change, in different geographic areas can be extremely complex and expensive to accommodate in our systems.
This is one of our concerns about the power for local authorities to introduce “premium” rates, which has been a late addition to the Bill. This was not part of the consultation process so no impact assessment has been conducted on the additional complexity and cost this will mean for businesses. As such, the impact assessment does not adequately reflect the clear disadvantages to the visitor economy of the “premium” policy. As mentioned above, we would urge the Committee to recommend the power to levy “premiums” is removed from the Bill.
The powers to make subordinate legislation are set out in Part 1: Chapter 5 of the Explanatory Memorandum (https://senedd.wales/media/g5ipwvwh/pri-ld16812-em-e.pdf).
The Welsh Government has also set out its statement of policy intent for subordinate legislation (https://business.senedd.wales/documents/s155951/Statement%20of%20Policy%20Intent.pdf).
(We would be grateful if you could keep your answer to around 500 words).
As you might expect, we would like to ensure that any proposals to change the levy rates that are set in the legislation (Part 3, section 12 (2) and section 12 (3)) are subject to a consultation with the tourism sector so that representations can be made. This is an important additional check alongside the central Senedd vote.
Similarly, as mentioned above, the power to impose a cap on the premium rates that local authorities can implement is not strong enough to avoid the visitor levy system becoming fragmented and highly complex, with different rates across Wales. We request that this section is removed from the Bill.
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(We would be grateful if you could keep your answer to around 500 words).
Our comments relate to both the registration requirement in the main text of the Bill and the additional enforcement provisions intended to be brought forward at Stage 2.
The introduction of a registration scheme as part of the Bill is also important pillar of Wales’s strategy for sustainable tourism.
Expedia Group, its peers and industry associations have long called for a registration scheme for short-term lets (STLs) in particular. We fully support the registration provision in the Bill and we appreciate the Welsh Government’s efforts in proposing a registration scheme that is as simple as possible, as they know we have concerns about future legislation on licensing for STLs.
Registration scheme are powerful tools gather data on the sector, providing the first comprehensive and authoritative metrics on the size and shape of the STL industry in Wales. This data then allows for evidence-based policy making and the data contained within the register can be used by local authorities and law enforcement to better enforce existing requirements around the safety and legality of visitor accommodation.
A registration scheme will allow authorities to cross reference property advertisements with the official register, so that the owners / managers can be easily identified on the rare occasions that complaints are raised about a property. This would enable a registration scheme to achieve many of the objectives that the Welsh Government seeks to achieve with a licensing scheme, but with far less burden and uncertainty on the sector.
We believe registration is a positive step and we will work with the Welsh Government to ensure that the system they propose will help support a sustainable tourism accommodation industry.
(We would be grateful if you could keep your answer to around 500 words).
We have no further comments at this time but Expedia Group would welcome participating in future opportunities to engage in relation to the Bill and its implementation.