It is hotel industry price gouging which is making Edinburgh tourism unaffordable

The commercial lobbyists for the hotels and other commercial premises which make their money from tourists coming to Scotland are complaining that the city is at risk of pricing itself out of the market for tourism.

On the face of it this is a legitimate concern; the price of staying a night in Edinburgh is now pretty well the highest in the UK, and that makes it among the highest in Europe. It is widely acknowledged that the Edinburgh Festival is being squeezed to death by the cost of accommodation for both visitors and performers. The preponderance of AirBnB and other short term rents means Edinburgh only narrowly avoids being the most expensive place to buy a house in Scotland (after St Andrews).

So yes, Edinburgh shows all sorts of signs of over-tourism and gives a very strong impression of being the most economically exploitative part of the country for tourists. Is this what the hotel lobby is complaining about?

No. Nor are they referring to the social cost of over-tourism. On a global scale the impact of intense areas of tourism on locals, heritage, infrastructure, the environment and much more are widely recognised. Edinburgh city centre is a small area and anyone who has been there will be acutely aware of the negative impacts of tourism at peak periods.

So is it this that the hotel lobbyists are worried about? No. In 2024 the Scottish Government passed the Visitor Levy (Scotland) Act which gave local authorities the power to raise as modest visitor levy to help local authorities deal with the impacts of over-tourism and to prevent them from having to load that cost onto its residents.

Edinburgh City Council is the first to introduce that levy, a five per cent per night surcharge on hotel rooms in Edinburgh. This is in line with dozens of other European cities which have similar or identical levies.

It is this that the hotel lobbyists are concerned about.

Now let us consider what the large commercial interests these lobbyists are working for have done for Edinburgh. For the majority of them they have... bought a building. There are a couple of new build hotels but most are based in existing buildings. Yes, some of these have been redeveloped, but mostly this is the economics of rent, not productivity.

And the message from the sector is confused anyway. They have complained that over supply has reduced occupancy, costing them money. In the last ten years an estimated 5,000 beds have been added to hotel supply in Edinburgh. Yet they have also claimed the highest occupancy rate in Britain when lobbying for relaxing regulation.

But above all there is a statistic that should really be at the forefront of the minds of policy makers. In the six years since 2019, the cost of hotels in Edinburgh has risen by a quite staggering 82 per cent, which is nearly twice as high as the city with the next biggest increase. London, by comparison, increased by only 26 per cent over the same period.

Anyone who has tried to stay in Edinburgh in recent years will no doubt instinctively agree with hotel lobbyists that Edinburgh is at risk of pricing itself out of the market. The hotel lobbyists are trying to persuade you that this is the result of a five per cent surcharged there to share some of this wealth with the people who live with its harm.

Or more specifically, the hotel lobbyists are trying to persuade you it is this five per cent levy and not the 82 per cent increase in the price of a room which is the problem. And yet these hotels remain very lucrative for the owners. Hilton - $11bn revenue, £1.5bn profit (up 35 per cent in a year), 14 per cent profit margin; Marriot's profits are £3.76bn.

Edinburgh City Council should take these lobbyists head-on, challenge them to explain why they are pricing Edinburgh out of the tourism market, be firm on the need for a visitor levy and stick to its guns in implementing it.

Indeed, it is probably time for Edinburgh to have a serious review of its affordability for both residents and tourists and to decide whether it needs a formal strategy of seeking to not be the most expensive place in Britain to stay a night.