Feasibility of Orkney visitor levy scheme to be investigated

The introduction of a visitor levy scheme in Orkney is to be investigated after Councillors today (24 September) recommended funding of up to £20k to carry out a number of feasibility activities. 

If the decision by the Council’s Policy and Resources Committee is ratified at Full Council in October, a formal and extensive engagement process with local communities, tourism businesses and organisations and other stakeholders will take place over the winter months to understand potential impacts and help shape the design of a future scheme if progressed.  

A cost-benefit analysis – measuring the benefits of a scheme versus the associated costs - will also be undertaken. The findings of both will then be presented to Councillors ahead of making a decision on whether to follow other councils in introducing a visitor levy. 

Orkney has a population of around 22,500 people and welcomes around 450,000 visitors annually – almost half of those come as day visitors – with a tourism spend estimated at over £114M. 

Pressures associated with high numbers of visitors in certain areas led some local authorities to call for powers to collect a local visitor levy.  

The Visitor Levy (Scotland) Act 2024 came into force on 20 September 2024, giving local authorities the ability to add a visitor levy to those staying in overnight accommodation. However, local authorities are not obligated to introduce a visitor levy. There is a substantial lead in time to implementing a levy, with the earliest possible introduction in Orkney likely to be 2027, if agreed. 

By enabling local authorities to invest more in tourism facilities and services, the new legislation represents a potentially transformational opportunity to generate benefits for local communities and visitors. 

A visitor levy would apply to overnight stays in a range of accommodation – hotels, hostels, guest houses, B&Bs, self-catering, camping sites and caravan parks - and a levy would be based on a percentage of the accommodation cost. 

The legislation does not include cruise ship passengers or motor homes, however the Scottish Government has committed to conduct a consultation on a cruise ship levy, with the first of four round table meetings being held in Orkney on 5 September. Read more here: https://www.orkney.gov.uk/latest-news/cruise-round-table-in-orkney/ 

The Scottish Government has also committed to engage with any proposals brought to them around a levy on motor homes. 

Council Leader Heather Woodbridge said: “Orkney is steeped in history and culture with a welcoming population, which has long made it an attractive tourism destination for visitors, many of whom come back time and again to enjoy what we have to offer. 

“Tourism makes a significant financial contribution to our islands bringing in millions of pounds to the local economy and supporting hundreds of jobs. However, the growing number of visitors also puts pressure on our public services and facilities, natural and cultural heritage and local communities. 

“With budgets continuing to shrink, the Council must investigate options that could help us to support services and infrastructure that both residents and visitors enjoy. 

“A visitor levy could provide the means of increasing the value of tourism for the benefit of all, enabling a more sustainable approach to tourism. 

“I welcome the decision today to investigate the feasibility of a visitor levy scheme for Orkney - the outcome of which will give us a better understanding of the benefits and challenges that such a scheme may bring. 

“It is vital that from the outset we engage with anyone who could be affected by a visitor levy to understand their related issues and concerns and carefully assess potential impacts. Stakeholder views will be essential to the design of a scheme that works for Orkney, if progressed. This is only the first step in a process that will offer opportunities for residents, businesses and visitors to have their say over the coming months.  

“Both Edinburgh City Council and Highland Council intend to introduce a visitor levy in 2026. We will be closely watching their progress.” 

A web page dedicated to the Visitor Levy is being created on the Council’s website that will include key information about the legislation, the process so far and the next steps. More details to follow.