England’s metro mayors are set to gain a new funding lever: a locally set charge on overnight stays. Announced on 25 November ahead of Wednesday’s Budget, the plan would allow combined authorities to introduce a modest visitor levy earmarked for transport, public realm and the visitor economy.

Under the government’s outline, the levy would apply to hotels, holiday lets, B&Bs and guesthouses. Emergency accommodation, homeless shelters and registered Gypsy and Traveller sites used as primary residences would be exempt, with mayors able to tailor further local exemptions. A 12‑week consultation runs to 18 February 2026.

Ministers say this brings England into line with global practice in cities such as New York, Paris and Milan. The ministry also points to more than 130 million overnight visits to England each year-a large base where a small, transparent fee can add up to visible local improvements.

City leaders already have spending priorities in mind. London has flagged upgrades to its busiest streets and support for culture and sport, including help for smaller venues. Liverpool highlights major‑event readiness for UEFA EURO 2028 and improvements to visitor infrastructure.

What would it mean for demand? Evidence suggests small, clearly explained fees tend to have limited impact on city‑break decisions, although effects vary by segment. A Scottish Government evidence review found that under one scenario, a 3% occupancy tax could slightly lift total tourism spending (+0.32%) while trimming hotel revenues (−1.37%) with partial pass‑through to guests. A Georgia case study linked a flat $5 nightly tax to lower occupancy, implying an elasticity around −0.7, while separate work indicates group business is more price‑sensitive than transient stays.

International benchmarks help frame expectations. Paris’s taxe de séjour ranges roughly from €0.65 to €15.60 per person per night depending on property category. In New York City, visitors pay combined sales taxes of 8.875% plus a 5.875% hotel occupancy tax, alongside a $2 per‑room nightly city fee and a $1.50 state unit fee.

For operators, the near‑term tasks are practical: decide how to display and collect any charge on the folio, update booking engines and channel contracts, and adjust rate presentations to keep conversion steady. If a city set a £2 room‑night fee, a two‑night family break would rise by £4; a 20,000‑room city at 75% average occupancy would generate roughly 5.5 million room‑nights a year-about £11 million in proceeds. That sort of visible pot works best when ring‑fenced into projects guests and residents can see.

Short‑term rentals sit within scope under the government’s outline, which helps keep the playing field level. New York State offers a reference point: since 1 March 2025, platforms and operators have been required to collect sales tax on short‑term rental bookings statewide, with a $1.50 per‑unit nightly fee in New York City-underscoring how the choice of who remits shapes compliance and cost.

Politically, this is another step in Labour’s wider devolution push. Housing Secretary Steve Reed argues the power will let mayors channel visitor demand into local priorities, and leaders across London, Greater Manchester, Liverpool, West Yorkshire, the North East, York and North Yorkshire, and the West of England have publicly backed the move.

Two design questions will determine the business impact: whether Whitehall sets a cap and how collection works. The government has not proposed a rate or a maximum; it stresses the charge should be modest, and the consultation will test whether an upper limit is needed alongside the operational details.

For hotels and venues, a sensible planning stance is that any levy will be additive to ADR rather than a headline rate change. Clear pre‑arrival messaging, package‑inclusive pricing and early engagement with corporate clients can reduce friction, while conference organisers should allow small contingencies in 2026 budgets as city‑by‑city proposals emerge.

Key dates for diaries: the consultation runs until 18 February 2026, and the Budget is set for Wednesday 26 November 2025. Enabling legislation would then need to pass before any mayor can switch a levy on, so the earliest practical start is later in 2026. We’ll track first movers and benchmark English rates against Paris and New York to keep tabs on price, occupancy and revenue effects.