Appendix 5 - Competitive Advantage Analysis
Perth and Kinross Council · 17 June 2026
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Moffat Centre | Perth & Kinross Council | Competitive Advantage of a Visitor Levy | May 2026 Competitive Advantage Analysis, Visitor Levy Implementation This document examines the competitive advantages a visitor levy can deliver for the Perth & Kinross Council region. Because no Scottish levy scheme had begun collecting revenue at the time of writing, this analysis draws entirely on evidence from comparable schemes already planned elsewhere in Scotland and schemes implemented internationally. The four themes covered: • visitor experience and product quality, • infrastructure and place improvement, • destination marketing and promotion, and • environmental sustainability These reflect areas highlighted within Perth and Kinross Council's Consultation and reflect areas of possible interest for this assessment. 1. The Comparator Destinations Before looking at each theme, it helps to briefly set out the comparator schemes this analysis draws on. Each has a different structure and scale, but all are relevant. Edinburgh agreed its full visitor levy spend plans in February 2026, committing over £90 million across three years ahead of the levy going live on 24 July 2026. At 5% of accommodation cost (capped at five nights), the scheme is projected to raise up to £50 million annually once established. Edinburgh's spend decisions provide a directly relevant Scottish benchmark, structured around the same themes this authority is considering. (Source: City of Edinburgh Council, edinburgh.gov.uk/visitorlevy, February 2026) Amsterdam has operated an accommodation levy since 2012, now set at 12.5%, raised progressively from 5% in 2018. The city projected collecting over €270 million in 2026 alone, reinvested across infrastructure, cultural life, and city operations. Despite consistent tax increases, Amsterdam remains one of Europe's most visited cities. (Source: Amsterdam Guide, guideamsterdam.org, March 2026; National Geographic, August 2024) New Zealand introduced its International Visitor Conservation and Tourism Levy (IVL) in 2019. Now set at NZ$100 per eligible international visitor (raised from NZ$35 in October 2024), it has funded a rolling programme of specific tourism and conservation projects documented in annual performance reports. (Source: MBIE, IVL Annual Performance Report 2023/24, mbie.govt.nz) Iceland reinstated its accommodation tax in January 2024 after suspending it during the pandemic, framing it explicitly around managing environmental pressures from tourism. International visitor numbers rose 2.2% from 2023 to 2024 and a further 3.5% in the 12
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Moffat Centre | Perth & Kinross Council | Competitive Advantage of a Visitor Levy | May 2026 months to September 2025. (Source: Euronews Travel, euronews.com, October 2025; Statistics Iceland) 2. Visitor Experience and Product Quality The most direct competitive advantage a levy delivers is funding visible, tangible improvements to what visitor’s experience, things people notice, talk about, and factor into whether they return or recommend a destination. Amsterdam's deputy mayor has described the city's levy as enabling it to stay "clean, safe and attractive" for visitors and residents alike, covering everything from litter management and street cleaning to law enforcement in the city centre and investment in cultural facilities (Source: National Geographic, August 2024). The practical effect is that visitor-facing quality is protected even as the city absorbs millions of overnight stays each year. Edinburgh's agreed spend plans show a similar logic. The "Well-Kept City Fund" covers enhanced cleaning operations, bin replacement in busy areas, graffiti removal, upgraded public toilets, and a dedicated city centre policing unit in partnership with Police Scotland. Alongside that, the "Destination and Visitor Management" programme includes direct business support to improve accessibility, sustainability, and fair work standards in the visitor economy (Source: City of Edinburgh Council, February 2026). These are the operational fundamentals that underpin whether a visit is enjoyable or not. Research supports the connection between levy transparency and visitor acceptance. A study of international tourists in Istanbul found that 81% supported paying a tourist tax when it was specifically earmarked for improvements to their visit. The same and related research consistently finds that tourism demand is broadly inelastic to moderate price increases, visitors absorb a reasonable levy without changing travel plans, provided they can see what it's used for. (Source: Cetin et al., 2017, MDPI Economies 5(2); Göktaş and Çetin, 2023, European Journal of Tourism Research 35) For a mixed urban-rural destination, such as Perth & Kinross, this is a meaningful opportunity. Visitor experience spans town centres and rural settings, paths, parking areas, visitor facilities, public spaces. A levy creates a mechanism to fund quality improvements across the whole destination rather than leaving gaps where general budgets run short. 3. Infrastructure and Place Improvement Physical infrastructure, car parks, footpaths, public toilets, public realm, signage, transport links, is what visitor experiences rest on. It is also where visitor pressure accumulates fastest and where underfunding is most visible. New Zealand's IVL offers some of the clearest project-level evidence available. Since 2019, the levy has funded a car parking pilot at high-demand South Island visitor sites, track and hut maintenance across the national park estate, fencing and facilities at
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Moffat Centre | Perth & Kinross Council | Competitive Advantage of a Visitor Levy | May 2026 natural hotspots under visitor pressure, and the Tongariro Alpine Crossing Sustainable Management Project, a specific programme to manage one of New Zealand's most heavily visited walking routes. (Source: MBIE, IVL Annual Performance Report 2023/24) The common thread is that visitor pressure impacts infrastructure, and visitor levy income funds the repair and management. Edinburgh's levy spend includes a "City Transformation Fund" to renew and restore key areas of the city, covering public realm improvements at Cramond Foreshore and Portobello Promenade, restoration of historic sites, and works to town centre streets. (Source: City of Edinburgh Council, February 2026) These are the kinds of physical improvements that residents and visitors both use, and that shows whether a place is well cared for. Iceland's government reinstated its accommodation tax in 2024 explicitly to address infrastructure strain from a growth in tourism post-Covid. The revenue is investing airport expansion at Keflavik and environmental management across natural visitor sites. Visitor numbers have continued to grow since reinstatement, a reasonable indication that modest visitor charges, clearly linked to maintaining the destination, do not deter travel. (Source: Euronews Travel, October 2025) For rural tourism destinations, they routinely face visitor pressure on paths, parking, and natural sites that requires consistently available council budget. A ringfenced levy provides a targeted mechanism to address this directly. 4. Destination Marketing and Promotion A visitor levy can improve a destination's marketing position in two distinct ways. The first is directly funding marketing activity. The second is indirectly funding the product improvements that make marketing credible and repeatable. New Zealand levy allocations in 2023/24 of NZ$42 million was committed to Tourism New Zealand specifically to market the country as a visitor destination in international markets. (Source: MBIE, IVL Annual Performance Report 2023/24) This is an example of direct competitive advantage, levy revenue funding the country's marketing capability at a national scale. Edinburgh's Destination and Visitor Management programme includes activity to broaden awareness of the city's year-round offer, encouraging visitors to explore beyond the well- known attractions and to visit at different times of year. (Source: City of Edinburgh Council, February 2026) Addressing seasonality and geographic concentration are among the most persistent structural weaknesses in any destination visitor economy, and dedicated funding to tackle them is a direct competitive improvement. For a mixed urban-rural authority, the marketing opportunity is particularly relevant. A levy-funded marketing programme can promote a joined-up destination narrative,
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Moffat Centre | Perth & Kinross Council | Competitive Advantage of a Visitor Levy | May 2026 connecting town-centre attractions with rural, or landscape experiences, extending average length of stay and spreading visitor spend more evenly. It also gives accommodation businesses, event organisers and operators a stronger, evidenced story to tell that this authority is investing in its visitor offer and maintaining the quality of its destination. There is an additional reputational dimension worth noting. Destinations with transparent, governed levy schemes are increasingly seen within the travel trade as responsible and well-managed. As more Scottish and UK authorities introduce levies, early movers who can demonstrate effective deployment of funds will be better placed to attract investment and partnerships in the visitor economy. 5. Environmental Sustainability This is arguably the strongest area of long-term competitive advantage for a mixed urban- rural destination, particularly one with natural landscape assets that form part of the reason visitors come. New Zealand built this principle into its IVL from the outset, framing the levy as ensuring "visitors contribute to the unique natural heritage they enjoy." Funded projects include habitat protection, restoration of walking infrastructure at high-pressure natural sites, and conservation programmes for threatened species. (Source: MBIE, IVL Annual Performance Report 2023/24; discovernewzealand.com) The underlying logic is straightforward: if the natural environment attracts visitors, and visitors degrade that environment, then visitor income must fund its protection. Iceland applies the same reasoning at a national scale. The accommodation tax reinstated in January 2024 is explicitly framed around managing the environmental impact of the country's tourism boom, keeping Iceland "pristine," which is the quality that makes it competitive as a premium destination. (Source: Trippz, tourist tax guide; Euronews Travel, October 2025) Visitor numbers have not declined since the tax's reinstatement, which supports the view that environmentally motivated levies do not deter the visitors’ destinations most want to attract. Amsterdam's "Tourism in Balance" approach is also relevant. Levy revenue funds investment in regional infrastructure beyond the city centre, manages visitor flows, and supports conservation of the historic environment. The city has moved explicitly away from a volume-based tourism model towards one focused on quality, sustainability, and liveability. (Source: Amsterdam Guide, March 2026; Travel and Tour World, November 2025) For Perth & Kinross Council, the environmental sustainability argument connects directly to competitive position. Natural assets, countryside, rivers, hills, coastline, woodland, heritage sites, are often what differentiates smaller Scottish destinations from each other
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Moffat Centre | Perth & Kinross Council | Competitive Advantage of a Visitor Levy | May 2026 and from urban alternatives. A levy that helps fund active management and protection of those assets is an investment in the destination's own competitive differentiation. 6. Visitor Acceptance – Demand Effects The concern most raised by the accommodation sector is whether a levy will deter visitors and harm the local economy. The evidence from established schemes is mostly consistent on this point. Amsterdam has raised its tourist tax from 5% to 12.5% between 2018 and 2026, a substantial increase, and remains one of Europe's most visited cities, projecting over €270 million in levy income in 2026. (Source: National Geographic, August 2024; Amsterdam Guide, March 2026) Iceland reinstated its accommodation tax in January 2024. International visitor arrivals increased by 2.2% from 2023 to 2024, and by a further 3.5% in the 12 months to September 2025, growth that occurred despite the tax, the closure of budget airline Play, and a volcanic eruption. (Source: Statistics Iceland, via Euronews Travel, October 2025) Academic research broadly supports the view that a moderate, well-designed levy does not significantly suppress visitor demand. Tourism economists describe demand as "inelastic" to modest price increases, meaning that the cost of a levy is typically absorbed by visitors without materially changing their travel decisions, particularly when visiting a destination they have chosen for its specific qualities. (Source: Durán-Román et al., 2021; Cetin et al., 2017, MDPI Economies) The critical variable is transparency. Research shows that visitors are willing to pay, and less likely to feel aggrieved by paying, when they understand what the levy funds and can see evidence of it on the ground. This has direct implications for how any scheme is communicated, to visitors, to accommodation providers, and to the public. 7. Summary The competitive advantage of a visitor levy is not just the income it generates. It is the strategic position that income enables. Across the comparator destinations reviewed here, four consistent advantages emerge: A dedicated, ringfenced funding stream. Unlike general council budgets, visitor levy income is reserved for visitor-facing services and infrastructure. This means competitive improvements are funded without displacing other council priorities and are not subject to year-on-year budget uncertainty in the same way. Visible quality improvements. Investment in cleanliness, public safety, public realm, cultural assets and visitor facilities directly affects the quality of the experience. Destinations that invest visibly in quality tend to perform better on satisfaction, return visits and recommendation, the organic marketing that drives long-term competitiveness.
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Moffat Centre | Perth & Kinross Council | Competitive Advantage of a Visitor Levy | May 2026 Dedicated marketing and demand management. Levy-funded marketing can address structural weaknesses like seasonality and geographic concentration and can promote a broader destination narrative that benefits the whole area rather than concentrating visitors in a small number of locations. Protection of the natural and built environment. For a destination with rural and natural assets, this may be the most strategically significant advantage. Visitor pressure degrades the very assets visitors come to see. A levy provides a mechanism for active stewardship, funded partly by those who benefit from it. The evidence from Amsterdam, New Zealand and Iceland, all established schemes, suggests that these advantages are achievable without materially deterring visitors, provided the levy is moderate, well-governed and clearly communicated. Edinburgh's agreed spend plans for 2026 onwards reflect the same thinking, structured around the same four themes this authority is considering. Realising a competitive advantage from a levy requires clear deployment of funds and transparent communication about what they achieve. Where that has happened in comparable destinations, the outcomes have been positive. References • City of Edinburgh Council, Visitor Levy spend decisions, February 2026. Available at: edinburgh.gov.uk/visitorlevy • City of Edinburgh Council, "Council agrees first round of Edinburgh Visitor Levy spend," 12 February 2026. Available at: edinburgh.gov.uk • MBIE New Zealand, IVL Annual Performance Report 2023/24. Available at: mbie.govt.nz • National Geographic, "Do Europe's tourist taxes really work?", August 2024. Available at: nationalgeographic.com • Euronews Travel, "Iceland to propose higher tourist tax following record-breaking number of visitors", October 2025. Available at: euronews.com • Amsterdam Guide, "Understanding Amsterdam's Tourist Tax in 2026", March 2026. Available at: guideamsterdam.org • Cetin, G. et al. (2017). "Willingness to Pay for Tourist Tax in Destinations: Empirical Evidence from Istanbul." Economies, 5(2), MDPI. Available at: mdpi.com • Göktaş, L.S. and Çetin, G. (2023). "Tourist tax for sustainability: Determining willingness to pay." European Journal of Tourism Research, 35.
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Moffat Centre | Perth & Kinross Council | Competitive Advantage of a Visitor Levy | May 2026 • VisitScotland, "Guidance on the Visitor Levy for Local Authorities," October 2025. Available at: visitscotland.org • Visitor Levy (Scotland) Act 2024. Available at: legislation.gov.uk Prepared: May 2026