When I visited Bhutan on assignment 15 years ago, I didn’t encounter many tourists. The country had been open to visitors since 1974, but prohibitively high entry fees (at the time, at least $200 a day – including food, guides and accommodation – plus a government surcharge of $65) meant that only those with a big budget could enter.
At times it felt like cost was a barrier to real connection. Those who did visit usually stayed in the luxury hotels built especially for them and were ferried between the country’s attractions in blacked-out 4x4s – a strange sight on the empty mountain roads that snaked to sacred monasteries and remote villages marooned on high plains.
Since then, hiking and homestays have become more popular as more conscious tourism takes hold, but the country won’t be welcoming budget tourists any time soon. Visitors (except those from neighboring India, who pay considerably less) currently pay a “sustainable development fee” of $100 a day, in addition to tour and accommodation costs, the world’s most expensive tourist levy.
According to Damcho Rinzin, director of Bhutan’s tourism ministry, the fee is having a noticeable impact in a country smaller than some U.S. states and with a population of fewer than 800,000.
“Funds are allocated to various projects that improve facilities, services and infrastructure for nationals and guests visiting Bhutan, and finance free healthcare and education,” he said.
Projects partially funded by the fee included laying underground electricity cables to Gangtey and the Phobjikha Valley, where endangered black cranes spend their winters. More was spent on cleaning and maintaining hiking trails, training tourism workers and helping to move away from reliance on fossil fuels, Rinzin said.
Paying the price for overtourism
Despite this, Bhutan’s approach has not been without its detractors, who argue that it has elitist tourism and hampered its impact on the economy. But with a growing number of destinations struggling with overtourism, the benefits of the country’s “high value, low volume” strategy seem increasingly clear. Since I visited Bhutan, many places have introduced tourist taxes or fees (albeit at much lower levels).
You pay them when you are on holiday in France and regions of Spain, Portugal and Germany, when you climb Mount Fuji in Japan or when you take a city trip to Amsterdam (which has the highest tourist tax in Europe, 12.5 percent of the accommodation costs). Many popular destinations use part of the money raised to protect and restore the local environment.
In the Balearic Islands, where visitor numbers rose 9 percent year-on-year in 2023 and seasonal overcrowding has led to a series of protests in Mallorca, a “sustainable tourist tax” has been in place since 2016, with rates ranging from 50 cents to €4 a day depending on the season and property rating. More than half of the €94.5 million raised in 2023 will go to water and environmental conservation projects, local news site Majorca Daily Bulletin reported. This comes against a backdrop of water scarcity, partly caused by intensive tourist use. Another initiative hopes to attract off-season visitors to the islands for sporting and cultural events.
Meanwhile, in Venice, a controversial pilot project ended on July 14, charging day-trippers €5 per day (overnight visitors already pay a night tax). Some residents criticized the project, saying it did little to deter visitors, but Simone Venturini, Venice’s councillor for tourism and economic development, believes the money generated will help address its impact.
“In 29 days, [the fee] generated a turnover of around €2.2 million,” he says. “In this first year, a large part of it will be used to pay for the ‘machinery’ created to ensure controls and develop the experiment, including the digital platform for bookings and payments. The remaining funds, as with the tourist tax, will finance the maintenance of the city and services for citizens and tourists. Cleaning the city and public water transport have additional costs compared to other cities.”
A welcome boost
Tourist taxes aren’t just used to counteract the effects of overtourism. In 2023, the Japanese city of Nagasaki will begin charging daily taxes of 100 to 500 yen per night. The city reportedly hopes to use some of the money raised to improve exhibits at the UNESCO-protected site of Japan’s Meiji Industrial Revolution.
Greece has scrapped its existing hotel tax and introduced a more expensive “climate crisis resilience fee” (ranging from 50p to €10 per night) from early 2024. This was done to fund reconstruction and responses to future extreme weather events in the wake of the devastating bushfires and floods of 2023. In February, Bali introduced a $10 daily fee for visitors, which it says will support “efforts to preserve the country’s nature and culture” and develop its transport infrastructure. Now, councillors in slightly less exotic Nottingham have voted in favour of a £2 daily levy to help promote the city’s attractions.
Financing Britain
The UK remains divided over the idea of tourist taxes. In England, there is currently no legal basis for them, although there are ways around them. In 2023, Manchester introduced a “city visitor levy” of £1 per night on hotel and serviced apartment stays, using a tourism-based business improvement district. According to a recent report, it will use some of the £2.8m raised to attract visitors to the city during low-occupancy periods through events and advertising. Some of the money will also help clean up the city’s streets.
But with post-Covid Britain still struggling to attract tourists, many operators are resisting making stays more expensive. A similar plan to Manchester’s was due to launch in Bournemouth, Poole and Christchurch on July 1, but has been delayed until at least autumn 2024 after concerns were raised by hotels.
Meanwhile, while the wisdom of introducing its own tourist tax is debated, one Scandinavian city has taken a radically different approach to discouraging bad visitor behaviour: instead of making tourists pay, why not put them to work and pay them instead? Under Copenhagen’s new CopenPay pilot project, tourists get free lunches, museum tours and kayak rentals in exchange for traveling by bike, picking up litter or working in a city garden.
“Making travel sustainable is a core task for us. And we can only do that if we bridge the large gap between visitors’ desire to act sustainably and their actual behavior,” Wonderful Copenhagen CEO Mikkel Aarø-Hansen revealed on its website.