Appendix 4 - PK Visitor Levy Scheme Economic Impact Assessment
Perth and Kinross Council · 17 June 2026
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Economic Impact Analysis - Perth and Kinross Council Visitor Levy Appendix 4 MOFFAT CENTRE FOR TRAVEL AND TOURISM BUSINESS DEVELOPMENT GLASGOW CALEDONIAN UNIVERSITY | 12th May 2026
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Moffat Centre | Perth & Kinross Council| Visitor Levy EIA
This is a formal economic impact assessment (EIA) of introducing a visitor levy in Perth
and Kinross Council Region (Perth and Kinross) under the Visitor Levy (Scotland) Act
2024 and Visitor Levy (Amendment) (Scotland) Bill 2026. Built on official Scottish
Government Input-Output (I-O) tables (published December 2025), it answers three
questions:
• How big is the existing visitor economy?
• How much money would a levy raise?
• What economic impact, if any, would the levy cause?
All figures are in 2024 constant prices (i.e., inflation has been stripped out). It draws on
2024 visitor volume statistics from the Great Britain Tourism Survey (GBTS), official daily
spending data from VisitScotland, and Scottish Government economic multipliers to
translate £1 of visitor spending into pounds of wider economic value (GVA) and jobs.
The EIA relates to spreadsheet 20260505_PKC_Visitor_Levy_EIA_Model.xlsx
1: The Existing Visitor Economy (Baseline)
Before any levy is introduced, Perth and Kinross already have a substantial visitor
economy. The model records 2,010,000 overnight visitor-nights per year (sourced
from Great Britain Tourism Survey or GBTS 2024 / VisitScotland). Hotels account for
53% of these, followed by self-catering (20%), B&Bs (14%), holiday parks (12%) and
hostels (1%).
Total visitor spending: combining what people pay for their accommodation and what
they spend on food, shopping, transport and activities, comes to £367.5 million per
year (in 2024 prices). About £257 million of that is accommodation revenue; the
remaining £111 million is spending in local shops, restaurants, attractions and
transport. This is calculated from the Average Daily Rates for Accommodation Types,
and the remaining share of visitor spend on other items (excluding travel to the
destination)
In plain terms: For every £1 a visitor spends on a hotel room, they spend roughly
another 43p on food, shops, attractions, and getting around.
Economic value generated (GVA): Using official Scottish Government multipliers,
every pound of visitor spending generates wider economic ripple effects. The model
produces two estimates:
• Type I (conservative): £256 million GVA: this captures the direct spending
effect plus the supply-chain ("indirect") effect, i.e., hotels buying from local food
suppliers, etc.
• Type II (fuller picture): £324 million GVA: this adds the "induced" effect: when
tourism workers spend their wages locally, that spending flows back through the
economy.Page 3
Moffat Centre | Perth & Kinross Council| Visitor Levy EIA Jobs supported: The model estimates: • 6,137 FTE jobs (Type I - direct + supply-chain) • 7,084 FTE jobs (Type II - adding jobs sustained by wage-spending) Plain-English version: Perth and Kinross's visitor economy is worth roughly a third of a billion pounds a year and sustains around 7,000 full-time equivalent jobs. Hotels and food & beverage are by far the largest components. This aligns with figures provided in the Scottish Government Scottish Annual Business Survey. 2: The Economic Value Generated - GVA and the Multiplier Effect Raw spending figures overstate the economic benefit, because some of that money flows straight out of the area (to suppliers elsewhere, imports, etc.). The model therefore calculates Gross Value Added (GVA) - the actual economic value created locally. It uses two internationally standard measures: Type I GVA captures the direct benefit plus the knock-on effect through local supply chains (e.g., a hotel buys linen from a local laundry, which buys detergent from a local supplier). This gives £255.98 million. Type II GVA goes further and counts the induced effect. These are the wages earned by tourism workers, which those workers then spend locally on groceries, housing, leisure etc. This gives £323.60 million. In plain terms: The recommended headline figure is the Type II number. For every £1 visitors spend in Perth and Kinross, approximately 88 pence of genuine local economic value is created. The remaining 12p effectively "leaks" out of the area. This is a healthy ratio as it reflects the fact that tourism in Perth and Kinross is relatively labour- intensive and delivered by locally based businesses. 3: Jobs Supported Using the same Scottish Government multiplier methodology, the model estimates the number of full-time equivalent (FTE) jobs that the visitor economy sustains: Measure FTE Jobs Type I - direct + supply chain jobs 6,137 Type II - direct + supply chain + wage-spending jobs 7,084 Critical caveat (stated explicitly in the model): These are gross jobs supported by visitor spending - they represent existing employment sustained by the visitor economy, not net new jobs created by the levy itself. Introducing the levy may marginally reduce overnight stays which would reduce this figure slightly. Any job-creation from reinvesting levy proceeds is not modelled here.
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Moffat Centre | Perth & Kinross Council| Visitor Levy EIA 4: How Much Would the Levy Raise? Under the Visitor Levy (Scotland) Act 2024, councils charge a fixed nightly fee per accommodation unit. PKC is modelling four rates: £2.50, £3.00, £4.00 and £5.00 per night. All 2.01 million unit-nights are assumed to be chargeable (no VAT exemptions or individual exemptions are currently applied in the model). After deducting 3% for collection and enforcement costs, the annual net proceeds would be: Levy rate Gross levy revenue Net proceeds (annual) Net proceeds (5-year) £2.50/night £5,025,000 £4,874,250 £24,371,250 £3.00/night £6,030,000 £5,849,100 £29,245,500 £4.00/night £8,040,000 £7,798,800 £38,994,000 £5.00/night £10,050,000 £9,748,500 £48,742,500 Plain-English version: A £3 nightly charge would generate roughly £5.85 million per year for PKC to reinvest - nearly £29 million over five years. Doubling the rate to £5 roughly doubles the take. 5: Will the levy put visitors off? (Displacement and Elasticity) "Price elasticity of demand" (PED) measures how sensitive visitors are to price changes. The application of a visitor levy (regardless of the range from 2% -5%) to the cost of accommodation will increase the overall price of a consumer’s overnight stay to Perth and Kinross. Economic theory suggests that as the cost of goods increases, the quantity demand of those good decreases. The relationship between the magnitude of the price change and the magnitude of the quantity demanded change is known as the price elasticity of demand (PED). As an example, A PED of -0.85 means, for every 1% increase in the total price of a visit, demand falls by 0.85%. Estimates for the PED for an overnight trip vary widely and the academic literature does not suggest a consensus. The Scottish Government commissioned research (accessible at parliament.scot) into estimating a PED for the Scottish Overnight Tourism Sector with the study suggesting a low-end value (that is, least price sensitive response) of -0.2 and a high-end value (that is, the most price sensitive response) of -1.50. The model applies three scenarios, sourced from the Scottish Government's own Financial Memorandum to the Visitor Levy Bill. The analysis cannot determine which scenario is more likely to occur. That is to say, the uncertainty of predicting future
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Moffat Centre | Perth & Kinross Council| Visitor Levy EIA consumer behaviour and the operating environment, it is difficult to comment which PED value is most likely to occur in the real economy. • Low sensitivity (PED = -0.2): Business travellers and loyal visitors who barely notice a small levy increase • Central/recommended (PED = -0.85): The best-estimate midpoint • High sensitivity (PED = -1.5): Price-conscious first-time or leisure visitors who might choose a different destination Crucially, the levy is applied only to accommodation, which is only part of the total trip cost. So, a £3 levy on a weighted average room rate of ~£128/night represents roughly a 2.3% accommodation price increase, but a much smaller percentage of the overall trip cost (once transport, food, activities etc. are included). This dampens the modelled visitor loss significantly. 5: Net economic impact (what the model recommends as the headline figure) The central scenario of £3.00 Visitor Levy with a PED = -0.85 is the model's central baseline for policymakers: Metric Baseline (no levy) Central scenario (£3, PED -0.85) Change Gross GVA (Type II) £323.6m £317.0m -£6.6m (-2.0%) FTE jobs supported (Type II) 7,084 6,938 -147 (-2.1%) Lost visitor nights - ~40,093 - Net levy proceeds raised - £5,849,100 - Under the highest levy rate and highest elasticity scenario (£5, PED = -1.5), the worst case, the net GVA still sits at £304.2 million, a reduction of £19.4 million (6%) from the £323.6 million baseline. Plain-English version: Even in the worst-case scenario modelled, Perth and Kinross retain 94p of every pound of existing visitor economy GVA, and the levy generates up to £9.75 million annually to reinvest. The economic trade-off is modest relative to the revenue raised. 6. Benefits of Reinvestment of Tourism Levy Revenue A visitor levy should be understood not only as a revenue-raising measure, but as a mechanism for reinvestment in Perth and Kinross’s visitor economy. The key policy benefit is that funds collected from overnight stays can be returned to the local area in ways that improve the quality, competitiveness and long-term sustainability of the
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Moffat Centre | Perth & Kinross Council| Visitor Levy EIA destination. This briefing already notes that the current economic model does not include a reinvestment multiplier, meaning any positive effects from spending levy proceeds on infrastructure, marketing, events or visitor services are additional to the base economic impact already modelled. Using the £3 per night scenario, the model estimates net levy income of £5,849,100 per year. If that income is reinvested locally, the indicative spending impact suggests an additional £2.34 million to £2.81 million in GVA and support for around 101 to 107 jobs. These figures are not presented as guaranteed outcomes; rather, they provide a clear, easy-to-understand illustration of the scale of the possible economic return from reinvesting levy receipts into the sector. In practical terms, reinvestment could help to support a stronger visitor offer in Perth and Kinross by funding improvements such as destination marketing, event development, public realm enhancements, visitor information, wayfinding, sustainable transport links and other measures that improve the overall experience for residents and visitors alike. Over time, this type of targeted reinvestment can help to protect the destination’s competitiveness, encourage repeat visitation and strengthen the wider local economy. Additionally, it may be considered that regular reinvestment through Local Authority managed visitor levy funds may act as a catalyst for private investment as promotion and product development occurs. This means the levy should not be viewed simply as an added cost to visitors. If the income is transparently and strategically reinvested, it can become a tool for place improvement and economic renewal, helping to ensure that a modest contribution from overnight visitors supports the long-term attractiveness and resilience of Perth and Kinross Key Caveats to Note 1. Gross, not net, impact. The GVA and FTE figures are gross - they show employment and value sustained by visitor spending, not net new jobs that the levy itself creates. Standard additionality adjustments (deadweight, displacement, leakage) have not been applied. This is common practice for baseline economic impact studies but means the figures cannot be directly compared to net cost-benefit analyses. 2. No reinvestment multiplier. When the levy proceeds are spent on infrastructure, marketing or events, that spending would itself generate GVA and jobs - a beneficial second-round effect. The model does not capture this, so the net impact on the economy is likely more positive than shown once reinvestment is accounted for. 3. Flat volume assumption. The five-year projection assumes zero real growth in visitor numbers. If tourism grows (or declines), all figures scale proportionally. 4. Persons-per-unit set to 1. The model currently assumes one person per hotel room, self-catering unit, etc. If this is revised upward (e.g., families sharing a unit), the levy burden per person decreases and demand displacement would be lower.
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Moffat Centre | Perth & Kinross Council| Visitor Levy EIA 5. No exemptions currently applied. VAT-exempt accommodation and individual exemption take-up are both set to zero. If the scheme introduces exemptions, levy revenues would fall accordingly. 6. The information in this report is based on sources we believe to be reliable. This does not warrant its completeness or accuracy. The findings and recommendations are based on circumstances existing at the time of preparation and may be subject to change. 7. It also does not apply HM Treasury additionality corrections, which would reduce the gross GVA figures somewhat. Conclusion This assessment demonstrates that the visitor economy is a significant and resilient component of the Perth and Kinross economy. Based on the available evidence, overnight tourism currently generates approximately £367 million in annual visitor expenditure and supports around 7,000 full-time equivalent jobs across accommodation, food and drink, retail, transport and visitor attractions. The modelling indicates that the introduction of a visitor levy would create a substantial and predictable revenue stream for reinvestment in the destination. Under the central scenario of a £3 nightly levy, the scheme is estimated to generate approximately £5.85 million in annual net proceeds, equivalent to almost £29.25 million over five years. These revenues could provide Perth and Kinross Council and local stakeholders with a long-term funding mechanism to support destination management, infrastructure, events, marketing, sustainability initiatives and wider visitor experience improvements. This analysis also demonstrates that the likely economic displacement effects associated with the levy are comparatively modest relative to the scale of revenue generated. Under the central modelling assumptions and based on the displacement factors generated for the Scottish Government, the reduction in Gross Value Added (GVA) is estimated at approximately 2%, while the wider visitor economy remains substantial and resilient. Even under the most pessimistic scenario tested, the area is projected to retain much of its existing tourism economic value. Importantly, the economic modelling presented in this report is intentionally conservative in one significant respect: it does not include the positive economic effects arising from the reinvestment of levy proceeds. Internationally, visitor levies are commonly justified on the basis that revenues are recycled back into the visitor economy to improve destination quality and support sustainable tourism growth. Indicative reinvestment modelling undertaken for this assessment suggests that reinvesting the annual proceeds from a £3 levy could support an additional £2.3 million to £2.8 million in GVA and sustain over 100 jobs in the local economy. While these figures are illustrative rather than predictive, they demonstrate the potential for
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Moffat Centre | Perth & Kinross Council| Visitor Levy EIA reinvestment benefits to offset a proportion of the initial displacement effects associated with the levy. The findings therefore suggest that the policy question is not simply whether a visitor levy creates a marginal additional cost for visitors, but whether the long-term benefits generated through reinvestment outweigh those costs. The evidence presented here indicates that, if revenues are transparently managed and strategically invested, a visitor levy has the potential to strengthen Perth and Kinross’s tourism infrastructure, improve the visitor experience and support the long-term sustainability and competitiveness of the destination. As with all economic forecasting, the findings should be interpreted with appropriate caution. The modelling is based on a series of assumptions regarding visitor behaviour, price sensitivity and future market conditions, all of which may change over time. The analysis therefore provides a robust evidence-based estimate of likely impacts rather than a precise prediction of future outcomes. Overall, the evidence suggests that a visitor levy in Perth and Kinross represents a potential policy intervention capable of generating regular reinvestment funding while maintaining the strength and resilience of the region’s visitor economy. All data and calculations are drawn directly from the EIA Model (Filename 20260505_PKC_Visitor_Levy_EIA_Model.xlsx). Multipliers are sourced from Scottish Government I-O Tables 2022 (published 10 December 2025, www2.gov.scot/input-output). Elasticity assumptions are drawn from the Scottish Parliament Financial Memorandum to the Visitor Levy (Scotland) Bill (Source: https://www.parliament.scot/- /media/files/legislation/bills/s6-bills/visitor-levy-scotland-bill/introduced/financial- memorandum-accessible.pdf).
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Moffat Centre | Perth & Kinross Council| Visitor Levy EIA
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Moffat Centre | Perth & Kinross Council| Visitor Levy EIA