Visitors could be required to pay a tourism tax when staying overnight in Wales.
The Welsh Government is introducing legislation to give councils the power to apply a visitor levy to accommodation bills.
Anyone staying in a hostel or on a campsite pitch would pay 75p per person per night, while it would be £1.25 per person per night for people staying in all other accommodation types, such as hotels, Airbnbs and self-catering properties.
The Welsh Government estimated that the levy could generate up to £33 million a year if all Welsh local authorities introduce it.
Ministers said the levy would raise money to spend on local tourism activity and infrastructure.
The Visitor Accommodation Bill will also include a registration scheme for accommodation providers.
It will need the Senedd’s approval and councils may only introduce it by 2027.
Visitor levies are used successfully in many parts of the world, including Manchester, Greece, Germany, Netherlands, Spain, Portugal and California.
Finance Secretary Mark Drakeford said: “This Bill is rooted in the principle of fairness.
“We know tourism makes an important contribution to the Welsh economy and to Welsh life. We want to ensure its long-term sustainability.
“That’s why we believe it is fair visitors contribute towards local facilities, helping to fund infrastructure and services integral to their experience.
“Visitor levies are common around the world – benefiting local communities, tourists and businesses – and we want the same for Wales.
“Money raised through a levy would be retained by local authorities and reinvested back into their local areas to support local, sustainable tourism.
“It’s a small contribution that could make a big difference.”
A statutory registration scheme for all accommodation providers is expected to start operating in 2026 to support the collection and administration of a visitor levy.
It will include details about who is operating in the sector, where and how they are operating, help to establish a better understanding of the sector and support future policy decisions at a local and national level.
Councillor Andrew Morgan, leader of the Welsh Local Government Association, said: “This Bill will give councils the option to introduce a visitor levy on overnight stays.
“It’s a way to raise extra funds to support local services and improve amenities that benefit both visitors and the community.
“Each council will decide how to apply the levy based on what’s best for their area, recognising that it may be suitable in some parts of Wales but not in others.
“Councils will carefully consider local circumstances and ensure residents are consulted before any decisions are made.
“We’re glad to have worked closely with the Welsh Government on this and look forward to seeing the draft legislation in the coming weeks, which will mark an important step forward for Wales’ tourism and local economies.”
Peter Fox, the Welsh Conservative finance spokesman, said a tourism tax would cost jobs and not attract more visitors to Wales.
“We’ve been absolutely clear from the start that this policy is the wrong one for Wales,” he said.
“A tourism tax will risk jobs at a time when businesses are being clobbered by Labour, it will impose red tape and it will work against its own aims by encouraging visitors to use more council-maintained attractions and services.
“Our tourism industry should be nurtured by the Welsh Government, not hamstrung by new taxes.”
William McNamara, chief executive of Bluestone National Park Resort in Pembrokeshire, said: “While we have slightly more clarity on the proposed visitor levy, including the £1.25 overnight charge, there remain concerns about its potential impact on the tourism sector.
“Wales risks becoming less attractive to visitors, especially families, who may view this as an additional cost in an already competitive UK market, particularly as this levy is not being introduced in England.
“The flexibility for councils to raise charges in the future also adds an element of uncertainty that must be carefully managed.
“Tourism is the backbone of communities like Pembrokeshire, and reinvestment in rural areas can undoubtedly bring benefits.
“However, the success of this levy will depend on clear accountability for how funds are used and a commitment to ensuring Wales remains a welcoming and competitive destination for all.”
