INTRODUCING a tourist tax in Edinburgh would reduce visitor spend by around £94 million a year, the hospitality industry’s trade body has said.

City leaders want to charge visitors £2 a night – or two per cent of the cost of their overnight stay – in a bid to raise an extra £13 million annually.

But hotel bosses and pub landlords insist the move would damage one of Scotland’s most important sectors.

New research by UK Hospitality indicates charging tourists £2 a night could result in a reduced visitor spend of around £94m a year in Edinburgh.

If the figures are extrapolated to cover Scotland as a whole, the calculated lost visitor spend would rise to a “potentially catastrophic” £205m.

Willie Macleod, executive director of UK Hospitality, said this showed the “very real damage that the introduction of a tourist tax could bring to Edinburgh and to Scotland as a whole”.

He said: “At a time of significant economic uncertainty, one of the highest rates of VAT in the world and being ranked 135 out of 136 in terms of tourism price competitiveness, Scotland should be doing everything it can to attract tourism and spend, not pushing us further out of reach.

“The survey carried out by Marketing Edinburgh on behalf of City of Edinburgh Council highlighted that ‘just’ three per cent of people wouldn’t come to Edinburgh if a tax were to be introduced.

“Our own findings concur but what CEC conveniently neglected to state was that this three per cent would result in a reduction in spend of around £57m per year – three times the amount that the proposed tax would generate in income.

“These figures simply cannot be ignored and I would once more urge the Scottish Government, as part of their own considerations into a tourist tax, to heed the warnings that these figures represent.”

UK Hospitality said data suggested 14% of visitors would reduce their spending if a new tax was introduced, while a further 3% would stay outside the city.

This would bring the total decline in visitor spend to around £94m, the association estimated.

It comes after Brigid Simmonds, chief executive of the Scottish Beer & Pub Association, said an extra levy would only add to the sector’s challenges.

Edinburgh Council leader Adam McVey has pointed to cities such as Paris, Berlin, Rome and New York, which all operate some form of tourist tax and remain hugely popular.