The Bookster Podcast: Scotland Visitor Levy Update

Transcript

Hello, I'm Simon and welcome back to the Bookster podcast from Inside the Sass Holiday rental company Bookster based in Edinburgh, Scotland.

Follow along as Bookster discuss their inner workings and their journey to where they are today.

Thank you for joining us and we hope that these conversations are insightful but ultimately helpful.

Now today as always I'm joined by Robin Morris co-founder of Bookster.

Robin, how are you? Very well, how's yourself? Yes, very well thank you.

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It's been a while since we've done one of these so it's good to be back in the Pod Studio.

Yep, yep, great to see you again.

And we're also lucky enough today to be joined again by Colin Guthrie.

Good morning Colin.

Good morning.

Good morning Colin.

For those of you out there who haven't heard any podcasts in the past, can you give us a quick brief outline of your job title and what you do at Bookster? Yeah sure, so I'm one of the co-founders along with Robin.

She started Bookster and my role is primarily technical and architectural.

I deal a lot with the back-end development, hosting, what technologies we use and how to add new features to best support our clients.

Fantastic, fantastic.

Well welcome both to the Pod.

Today we're going to be looking and talking about the visitor levee which is a hot topic at the moment.

We've had one of these

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before previously but we thought we'd revisit it and just sort of do an update on it.

So one of you like to kick off by just sort of explaining to listeners what is the visitor levee.

We're obviously based in Edinburgh so maybe you could explain to the listeners.

Okay, I can do that.

Simon is momentarily disappeared by his back so that's good.

But yeah I'll explain a quick summary of what the visitor levee in Scotland is.

It's essentially a percentage based charge on top of stays, short term stays currently implemented in about five or six regions in Scotland and accommodation providers need to take this charge from guests and pay it to their local council.

Although it's some people call it a

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tourism tax, it's actually applied to more than just tourists.

It's anyone basically staying in a short-term let or B&B or hotel etc.

And it's the sort of first implementation of it has been in Edinburgh and in fact right now in October 2026.

It's kind of the first time that our clients and people you know accommodation providers are being required to make a payment to the local authorities.

So this is the first one in Scotland so it's kind of in that sort of it's really starting to hit the road now that people are actually requiring to pay money over.

So yeah that gives you a brief overview.

Great okay so is it just Edinburgh that it's focused on at the moment or are there other regions as well that are doing this? So no it's across various other other regions and I'll just

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have a quick look right so it's Edinburgh is now like completely live.

Glasgow is also it's applying to bookings that were taken from April 2026.

Aberdeen is pretty much started as well although you know you're not actually required to pay until next year for both of those regions.

Stirling and West Dunbartonshire they'll be starting pretty soon too.

I think West Dunbartonshire is actually maybe just started also.

Yeah, West Dunbartonshire started and Stirling starts for bookings made from the 1st of January next year.

Yeah so there's five council areas that are confirmed that they are doing it and then there's a whole bunch of others that are currently consulting.

So Argyll and Butte on the East Lothian, Falkirk, Highland, Perth and Kinross and I think some Dumfries and

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Galloway have kind of rejected it at the moment but so it's basically being rolled out across a number of regions.

So what and obviously it's a tourist tax if you like but what does it actually mean? I mean when do you pay it one night? Every night you're staying is it the whole duration? What happens? So it's basically a percentage of the value of the booking.

Edinburgh I think uniquely have capped it at five nights so basically for the value of the booking over five nights in theory you don't pay anything but in the others it's just a flat percentage on the value of the booking as a guest pays basically.

Yeah so that's broadly how it's being implemented.

So I was going to say technically I'll let Colin come in.

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Technically it's not really the guest that's paying it is the accommodation provider that is kind of liable to pay it although you can show or at least you need to say the guest well it's covered in the booking so although the guest does sort of pay it as part of the booking it's the actual strict liability for it is the accommodation provider and so you know to some extent the guest could be not completely oblivious but could sort of be oblivious to the fact that it exists although most of the time well they people do need to say all taxes are included so the money does come from the guest I suppose maybe especially if

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the accommodation provider puts the prices up to cover it but it is actually the accommodation provider that is actually liable that's where it's coming from.

Yeah and I think the important sort of distinction there is that actually the legislation that's in place for the guests is really a sort of generic legislation it's basically that you can't show you can't hide costs so you can't say oh your holiday costs £500 but then you arrive and you're told oh it's an extra £50 in local taxes or something like that you know that applies across the EU lots of different regions it's just a price transparency thing so you know you shouldn't get any hidden surprises is the general sort of just if that that side of the legislation so yeah the price that you see whether you're booking direct or whether you're booking through Airbnb or whatever booking.com verbal and the price that you see there has to be the total price that you're liable to pay and there are

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no extra so generally speaking yes the cost is included in the price technically you pay at the time of booking that's a bit of a gray area because you might only pay an initial deposit for the holiday you might you know people could set it up in different ways so they could say the cost of your holidays 500 pounds but we're going to take 450 now and you can pay the levy and cash at our reception you know hotels might do that but generally speaking people generally just want a figure and a price and pay it all up for me.

I mean I guess we're talking about this because it's causing some issues and problems it's not from your point of view or from everyone's point of view it's a great not a great thing perhaps give us some insight into the mood about it.

Yeah I mean certainly the mood in the industry is pretty grim and I think it's very much you know we've been campaigning as in as an industries from the

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very beginning you know we've been shouting very loudly and especially I mean this covers a variety of different types of accommodation hotels large chains multinational companies right down to you know sort of individual operators that are operating very much at the smaller end of the spectrum and I think the the voices that we've been shouting at because Bookster's mainly short-term lets and you know we've been represented by our industry body the ASSC the Association of Scottish Self-Caters and there really has been a huge campaign of information and reaching out and saying we want to work together we want to do everything we want to understand all these the kind of problems that are present in the models that have been represented and really the powers that be the people that are deciding these things are being really intransigent about actually just getting involved and discussing things and actually taking on board the advice given and it's it's incredibly frustrating

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to be at this stage now and still and you know we're actually past the first quarter of the levee being live for the bookings that the returns are now due and we've got an extra 10 days before those returns need to be submitted and then another 14 days after that before the payment actually needs to be made but there's still not clarity on exactly how things are paid and the fact that that all of the major online travel agencies the OTAs your your booking.com your Airbnb's etc the fact that they can even support the Edinburgh model and this 5% cap to five nights is really telling that they they've come up with a scheme that just doesn't work in practice it's it's not a scheme that makes sense to the industry and they are forcing a huge amount of work and cost down the pipeline into the economy that's being absorbed by all these

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small businesses some big businesses some some you know multinationals but but a lot of the time it's it's the small businesses that are really really harmed by this and the fact that that that cost isn't really in any economic impact assessment is feels really really wrong because all they're they're interested in is these headline figures of how much revenue this is going to raise and yeah so it's really disappointing the mood's not great and and yeah it feels like we're hitting our heads against the brick wall a lot of the time.

So you know from an outsider what what is the actual problem with this then what is so bad about it? So a lot of the problem is that I think a lot of the guidance and a lot of the architecture of it I mean I just last week I read the latest version of the the Edinburgh Council advice to accommodation providers version 2.1 which was a thrilling document and all of it is

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is very much geared around calculating the levy from a source data.

Now that's all well and good if you've got the breakdown of all the costs but really the reality of it is is that you're not calculating the levy that we round.

Many times that you're giving the price to an online travel agent but you might also authorize that online travel agent to say well give them an extra 10% discount if they're a loyal customer and we know they're not going to be any bother that kind of thing you know you might have heard of genius discounts on booking.com for example you know those are the kind of layers that can go on top.

Now we just give a raw price to these to these OTAs and say well for a stay of from you know this date to this other date for five people or whatever it's this price.

So when they discount it it completely changes how that breakdown might occur.

Now the problem is that actually at its core as Robin mentioned earlier it's

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it's a property tax it's the property owner who is responsible for it and depending on the relationship that that property owner has with say an agency that's representing them it can completely change the base value at which you calculate that levy on.

So a standard agency that charges a commission to the owner you might charge the full amount the total value of the booking as presented on the OTA.

However if an agency agrees to rent a property from an owner for a fixed price per month you know I'm just renting it off you for thousand pounds a month that'd be nice but and then actually that's what's termed the initial transaction and that value is what you base the levy on.

Even if the agency marks it up and sells it for two thousand pounds or two thousand pounds a week it's still the initial transaction that actually is

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what you base the levy on and that's in the guidance and that's the calculation that's made.

Now that business relationship is only known to the agency it's never known to the OTA it's never known to the booking.com's the Airbnb's or whatever so from a fundamental perspective they cannot calculate what the levy component is they just don't know they don't have that business relationship they don't have that information so the whole scheme because it's percentage base because it's all this kind of nuances of different rules and ways of working means that it's incredibly hard to calculate and show transparently to the user so you have to include it in your price and relationships that might have been modeled in accounting for agencies now have to be modeled in other areas so that we can calculate levies and produce returns and so on and so forth.

So Bookster's actually had to add quite a lot of additional support within our system in order to sort of track the

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levy on each booking.

So it's yeah it's become an incredibly complex thing and I think it's quite telling actually in that latest guidance that I mentioned that was just released the other week the examples they gave were calculating online travel agency commissions and increasing your costs to cover it there were basic mathematical errors in it to begin with but also they assumed that the OTA fees were fixed amounts and that is really telling because they said oh the OTA will charge 15 pounds a night for their commission.

None of the OTAs charged like that they all charge a percentage and when you've got a visitor levy that's a percentage and an OTA fee that's a percentage and you as an agency need to cover your costs the calculation that you potentially need to do involves non-linear algebra in order to actually make a calculation that can

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cover all your costs.

Now you're not getting a little guidance document that comes out from the council that specifies complex equations in order to calculate costs so all of this combined there's a whole bunch of other stuff that we won't have time to go into I don't think concerning VAT liabilities and VAT thresholds and counting towards turnover and various other things that just none of them really needed to exist in order to implement this.

The fact that they've forced their examples for OTAs to be fixed price to keep the mass simple really tells that they should never have picked a percentage model.

They should have picked a fixed price per night it would have made everything a lot easier and it would have made it easier still if they'd actually charged the guest directly.

Yeah so the second I mean on a more I'm gonna start with something negative but I'm gonna get back to a positive in terms of like we've implemented some tools to help our clients but the other kind of deadly

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sin that was made in this scheme is as Colin alluded to there was that they're making the accommodation provider pay it rather than the guest pay it at the point.

Now sort of a little bit of sympathy because with authorities here because I would guess having talked to some people about it the problem there is people don't pay it and then they just go back to Argentina or Spain or South America or wherever they're from.

So really like anywhere that speaks Spanish for Nigeria.

Wherever they come from they come in they're asked to pay this thing they're like well if I don't pay it I'll just go away again and nobody'll ever ever catch up with me.

So I can understand why they might you know but there are

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mechanisms around that you know you could make sure that you know is that the accommodation provider that is responsible for making sure that they pay it in some way they could match it up with the boot gongs and make sure and they could say well you know you've got to pay the balance you've got you know 70% of your clients to pay it great but there's this balance left over.

So but asking the accommodation providers to pay it as Colin says it then chucks it into a massive admin bucket and complexity of maths it adds to their fat threshold all that stuff but if you'd said well actually the guests could just pay it as a QR code it's they're here for five nights and there's two people right that's 25 pounds bang done you know it's you know they get a receipt or they show a code to the accommodation provider who scans it and that's their proof that it's been paid you know that sort of scheme yes

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you might have people that don't pay it as maybe you'll get you know and might be a lower percentage of people that pay I suppose but you would avoid enormous amounts of hassle.

Millions of pounds of cost within the industry.

So and I think that's the anyway so that that's that's another negative.

On the plus side for us you know or not for us but we have or are continuing to attempt to implement tools inside Bookstar to help our clients understand how much they are all how much is outstanding and provide them with tools to submit the levy to to the council I mean although it's a very crazy format that they've chosen at least there is one format for submitting it to all councils well I'll jump in there because we don't actually know that

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yet and it should be one format but there are a bunch of three columns within just to explain it's a spreadsheet so the format is not some kind of programmatic interface not kind of some way that the property management systems like Bookstar can communicate with the council and submit it all automatically just behind the scenes using some kind of API that doesn't exist it's a spreadsheet that you have to download fill in and then upload again to the visitor levy.scot website and now in the format that we've seen because it's the only one that's actually live and for submission and in Edinburgh there is three columns within that that sheet that specifically require you to break down the costings of your bookings above five nights and that's because the Edinburgh has this five night cap on the levy so far none of the other council areas have got this cap so at the moment we don't actually know what their format

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will be and for their submissions it could be that those columns are there and are meant not to be filled in it could be that they're there and they're meant to be filled in but not used in the calculation and we don't know yet and the problem would be is if another council says okay we're gonna do a cap to but we're gonna cap it at three nights or we're gonna cap it at seven nights this whole set of columns is for five nights so if they do exercise their powers and decide a different cap then the format will have to change and but yeah that's well I think I think and in terms of you know if you're listening to this as a accommodation provider self-catering self-short-time provider we do have tools that will help you so that you know I think you know it's our problem in a way to some extent to try and come up with something

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that and make sure that it makes your life as easy as possible that's our job and we would rather not be doing it but in terms of you know we could have gone with lots of other things that we would say would be more productive in terms of helping teachers that we might want etc but in terms of producing the pain of this to you for you to understand as a accommodation provider how much you should be keeping aside to make payments and so there's not some big surprise at the end of a quarter to understand and to then have something that you can use to calculate your mission to see you know against a booking what the levy is likely to be or should be and bookstore does have that built in so yeah hopefully hopefully that's a good thing for our clients anyway yeah absolutely yeah so I mean if you take away the take away the hassle

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of all this and you know the algebra you've got to go back to go and learn and is the visitor levy a good thing I mean is it going to help Edinburgh you know all that stuff I mean that's that's a question that really is open to interpretation I think everyone will have their own opinion on it I think there's no doubt that the councils everywhere are under massive pressure financially so bringing in additional revenue is a good thing but whether that makes economic sense overall is very questionable there's there's been various independent economic studies that have been done over the years by various bodies and one of the figures I read and I can't remember the source so I'm entirely citing this without source but one of the figures I read was that for every pound spent on visitor levy it actually impacted to spend in the local economy by 1.4 pounds so that meant that every pound raised directly to the

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council is costing the economy 40 but actually losing it one pound 40 because you're just shifting where the money goes so from that perspective it doesn't sound like it's a good thing from the overall economy and from getting money directly into the councils it's obviously a good thing if you're a council and but if you're a business operator in hospitality if you're a cleaner if you're somebody who does property maintenance or concierge services or anything around tourism and whether it's activities all these kind of related industries that's who actually get impacted by the levy by tourist taxis so that's a general thing that's economic theory it's beyond my expertise certainly and so I think it's more of an open question that one and it might prove to be good to might see some some improvements but we might also get an

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overall flattening off the overall tourism market yeah as I mean we're kind of not in a position well I'm not anyway in a position to understand whether it is a good or a bad thing but I think yeah it does have to be understood that if if you if you if people are spending more they obviously to some extent they've got budget I mean these things are elastic and they're necessarily like you know it's not like you know a fixed thing per se but if you're asking visitors to spend more on their accommodation which is really what you sort of doing there is going to have be some impact on what they spend elsewhere so they might not go out for that lunch that they were gonna do or they might go to not go to that visitor attraction that they might have done before you know they might so it's yes it's raising money but yeah it's very difficult

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shifting money around rather than shifting money around getting more money into the economy is it is it or you know obviously from what is what it does do maybe to some extent you know there has been a lot of demonization of tourism and it might have a political positive that it gives you know a direct benefit to people who are not involved in tourism whatsoever and just get annoyed by tourists so you might have a positive ability for tourism businesses to be less demonized than they are sometimes and they are sometimes demonized especially short-term lets but other tourism sectors as well where you know it's like well what are you you know you're just getting a lot of people into

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our city and then making money off them and then they're disappearing again at least you can say well no there's this there's this direct you know revenue that goes straight to your council and spent on you so I think you know as much as the way it's been implemented is has been that is being awful for us you know there are there will be some reasons why it might have a longer term benefit but as Colin says you know who are we really to judge that I think one of the the fundamentals are takeaways as well yeah it's not it's not about the existence of the levy it's about the implementation but I've spoken to a few accommodation providers and they said now said if we could go back in time and say to the powers that be just increase our rates you know our business rates put them up to make your revenue and take it directly they would they would jump at that because that's very simple it's easy to account for yeah they have

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to put their prices up to cover the costs etc but that's a very simple model the fact that all of this tourist levy tourist tax fluff on top and presented to the guests and painted all the way through the system that might get you some of these these political gains as Robin said but fundamentally and that would be so much simpler and would have cost much less throughout the whole supply chain in the economy so yeah I've had quite a few property owners say that to me now and but of course if you were to present that as the case at the beginning they would have been up in arms yeah so you have to experience the pain of what they've actually done to appreciate the benefit of having your rates raised no we just you know as probably all of us have been overseas recently or some point in our lives we were in Greece last year and we got the hotel and they charged us you know ten euros a night on top of our stay as that

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was there sort of way of getting there so extra taxing tourist tax which does seem listen to you guys today a much simpler way of maybe implementing this sort of thing and do you know just final question really I guess do you know if this is now sort of permanent thing is it a trial period no revisit it again or we have stuck with it I think we're stuck with it for a while anyway and I mean really Edinburgh has been effectively collecting this money since last last year for bookings and so we're already almost a year in and our vats were over a year in now and off of collecting this this money so it's going to stick around for a while we very much hope that things will change and but a lot of the costs that people have had to bear from dealing with this has been sunk there's still an administrative cost and an ongoing cost but

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once tools like bookstore can add support for these things and you know make the process as smooth as it can be a lot of the running costs you know it's an initial high cost to the industry but then once that cost is sunk it will gradually become operational costs only now yes it's still an operational cost and yes it probably would be simpler to have a different model but once those are understood by the operators maybe it's better the devil you know I honestly don't know I think I would still much prefer it all ripped up and changed tomorrow but I'm not sure it's going to happen in practice fair enough no it sounds like this is a conversation we should probably revisit again in a couple months time so yes I don't think it's a way anytime soon so I think I think one one interesting thing is that we are reaching the end of this and this first quarter in Edinburgh now at the end of July Edinburgh

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Council released figures of how much they've earned from the tourist tax now they had no way of knowing what those numbers were they are pure conjecture and projection they don't know because the returns are quarterly so we're now at the end of the quarter we've now got 30 days to submit the return at which point they will know how much they have earned over those three months not the first month and I think once those figures are actually in it's going to be very interesting to see how well the industry is adapted to the requirements that have been put in front of it and obviously bookstore clients will do really well by submitting a very accurate levy and but again I think because of the complications of these models of not knowing in a rent for rent scheme there's there's the jury is out over OTA fees and various other things that

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we've been told clients have been told to seek legal advice on so quite exactly how you calculate your levy is still very much up in the air and I think there will be legal challenges to come I think there will be a lot of churn and how things are done and yeah it's not going to go away anytime soon I'm really interested to see what these figures actually turn out to be and whether it's anywhere near what they predicted would be the income from all right interesting and the takeaway from all this is your your clients are in safe hands with you so you're best to support you absolutely no and if anyone has any questions I guess get in touch with you absolutely fantastic right we're just over the half an hour point so I think probably we should wrap it up it's been fascinating though it's obviously one that's got a lot of heat behind it and there are lots more conversations to be had and which I'm sure we will do in the

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future for now though Colin thank you very much for your input in your time Robin thank you again nice to see you again thank you Simon we'll do this all again very soon and for everyone who is listening you can find previous episodes by looking wherever you get your podcast from this one will be uploaded well it's obviously uploaded now because you're listening to it another one very soon as well until then take care and good bye [BLANK_AUDIO]