Cambridge BID considers its options after hoteliers reject visitor levy that would have raised millions
Cambridge BID is considering its options after hoteliers voted down its bold plans for a visitor levy, which could have raised an estimated £9million over five years to invest in the city.
The £2 per room per night charge would have funded a raft of measures to support the visitor economy and encourage longer stays throughout Greater Cambridge. A number of these changes would have benefitted residents too.
To introduce the levy, Cambridge BID (Business Improvement District) needed majority support in a ballot of 23 hotels in Cambridge and South Cambridgeshire. But only six voted in favour, with 16 saying no and one vote proving invalid.
That result left the organisation shocked and disappointed, as it had spent 10 months working on the plans, held more than 50 hours of discussions with the industry and received positive verdicts from many hotel managers.
Maria Manion, CEO of Cambridge BID, told the Cambridge Independent this week: “We have to establish with the businesses why they didn’t support it. It was a surprise and disappointing, considering the amount of work and conversations that have taken place with hoteliers. Taking on board those discussions, we developed a business plan but obviously that wasn’t enough for them to support the concept.”
The vote means that, unlike Suffolk and Norfolk, Cambridge has no representation with Visit England. It will not have the funds to develop its destination management organisation, introduce a New York-style City Pass to promote attractions or fund new ambassadors to help control the flow of day visitors and improve the city centre experience for everyone.
The levy would have been introduced by creating an Accommodation Business Improvement District, or ABID, covering Cambridge and South Cambridgeshire. The measure is covered by legislation and has been successfully used to introduce a £1 levy in Manchester.
Here, the levy would have applied only to hotels in Cambridge and South Cambridgeshire with more than 10 rooms and a rateable value of more than £34,500. Guest houses, pubs with rooms and accommodation such as Airbnbs would not have been included. University of Cambridge colleges with accommodation would have been invited to join on a voluntary basis.
Maria believes there were a number of reasons hoteliers did not approve.
“One is that there is an inherent inequality in the system because of the legislation we are using. It is aimed at larger hotels and misses a raft of accommodation providers, like self-catering or serviced accommodation. Some of those are not covered in the legislation because they are in a domestic not business rating,” she noted.
Some hoteliers may also have felt they were being asked to help solve challenges created by day visitors.
But Maria pointed out that there is no mechanism to charge them entry to the city - while raising money from tickets at attractions is problematic because many of them, like the museums, are free.
Hoteliers would have handed over a sum based on average occupancy rates. But that may have put some off.
“Some of them saw it as another cost to their business because they have to recoup it via their visitors,” said Maria. “It’s not a tax. It’s a levy, so you can only ask the visitor to pay it, whereas with a tax the visitor is obliged. But in Manchester, nobody has refused to pay it a year on.
“I think that’s because when people are travelling in Europe or America, it’s something they are familiar with and it’s not even the cost of a cup of coffee. And that level of cost doesn’t influence whether you are going to stay in that destination or not.”
The levy would have brought in an estimated £1.1m in the first year, rising to around £2.5m after three years when - at the suggestion of hoteliers - it could have risen to £3.
The first simple measure it would have funded would be information screens in hotels, advising guests where to go and what to do.
It would also have provided the business plan and funding mechanism needed to make Cambridge eligible to join the Local Visitor Economy Partnership (LVEP) programme from Visit England.
“Without that partnership award, Cambridge will be limited in what it can undertake worldwide because it won’t be part of Visit England.
“If you join, you go to exhibitions in America, China and Germany and have access to travel trade markets, which at the moment we don’t have. We were looking to develop the destination management organisation to access those markets.
“Across the country, Visit England is announcing all the partnerships. Norfolk and Suffolk have just joined. Cambridge is not in a position to do that. We’ve just received an email from Visit England saying we need a discussion about what happens next.
“A destination management plan was commissioned by the councils to look at the way we manage the visitor economy in Greater Cambridge. There is going to be no vehicle to deliver part of that.”
At the moment, the day-to-day activities and website of Visit Cambridge - the city’s destination management organisation - is funded by Cambridge BID.
“We will be limited on the domestic travel trade work we can do too because we’ll have limited resources,” said Maria.
“One of the proposals was to employ additional ambassadors for the coach parking areas in the height of the summer with radios. If King’s Parade or another area was really busy, they could speak to the tour operator to suggest where to go first. It was about the management of the flow of visitors around the city, so whether you’re staying overnight or visiting for the day, your experience would be better.
“Another basic benefit would be to supply maps and information into the hotels at a level they wanted. We supply some, but we can’t do it all the time.”
“It was also about creating themes for Greater Cambridge and saying to people that Cambridge is more than just King’s Parade and punting. It’s about telling the story - how to spend two or three days in Cambridge: with themed itineraries, food tours, spa breaks.”
The ABID would also have funded major events to have “a significant impact at times when the city was quieter and overnight stays were lower”.
And it would have promoted a range of attractions across
“A City Pass - rather like the New York pass - would encourage people to stay. As soon as you see that, you are thinking of staying for two or three days, so you’re looking at two nights minimum. We would be looking at taking people to Duxford, Madingley and Anglesey. The city tour buses would have been included on it. This would change the dynamics of the city and the positioning of Cambridge.
“We have an international reputation but how do we translate that into quality experience? This wasn’t about creating more day visits, but enhancing the quality and length of stay, and investing in the city.
“When you are looking at raising anything from £1.1m to £2m a year, that has the ability to attract other funding because you are able to pump prime partnership work. At the moment we’re not in a position to go for national funding.
“We’ve never had that level of funding and we can’t achieve it by asking for it from different public sector agencies. It’s just not there. We’re not going to get there by asking for memberships or subscriptions. It’s not going to generate that level of income at all. We are having to rethink.”
“It was a big gamble for Cambridge BID to do this and the board and the team have been very bold in going with this,” said Maria. “We thought we had the support of hoteliers to progress it so that’s why we’ve got to take a step back and find out if we went wrong somewhere or what changed.”
For the ABID to have been introduced, both a majority of voting businesses and a majority in terms of their rateable value would have needed to approve of the move.
The businesses that said yes had a combined rateable value of £2,282,500 (an average of £380,417), compared to £7,030,750 (an average of £439,422) of the 16 that said no. The business that gave an invalid vote had a rateable value of £800,000.
The results indicate that larger hotels in particular opposed the idea, suggesting that while local managers may have been brought on board, corporate decision-makers may have rejected the notion.
“We’ve had very positive conversations with managers in Cambridge. But obviously they have to pass it up the chain,” noted Maria.
“It’s hard to understand the next steps until we get feedback. We could just carry on and do a very limited amount on Visit Cambridge.
“We have the option, which is high risk, of going back to ballot for an ABID. We would have to have very clear conversations first for that to happen.
“We could work with partners to try and establish a core-funded destination management organisation, but are there core funders out there?
“Do we do a combination of membership and core funding? That demands resources and it would take time and certainly we would never get in a year an investment of £1.1m, let alone £9m over five years.
“There’s the option to contract the DMO development to an external body. But they would expect core funding and membership.”
Alternative funding via ticket entries is problematic when so many attractions in Cambridge are free and charging a day entry on coaches would be very risky.
“That could potentially kill the reputation of Cambridge as a destination,” said Maria. “If you’re not visitor friendly, it damages you and it would damage our businesses financially.”
When promoting the idea of the ABID, Glen Sharp, chair of Cambridge BID, points out: “Only about 10 per cent of our visitors currently stay overnight and this is something the ABID would look to change. I think it is also really important to be clear from the start that the ABID development is not about attracting more people to Cambridge.”
Both Cambridge City Council and South Cambridgeshire District Council’s leadership supported the idea of introducing a visitor levy, which would have come into force on 1 January, 2025.
But the legislation requires support from the hotel industry itself.
Cambridge BID is also likely to hold discussions with Cambridgeshire and Peterborough Combined Authority, which has the visitor economy as one of its emerging priorities.
