Overnight visitors to Cambridge could have to pay a new ‘tourist tax’ in the future, under plans to generate funding to invest back into the city.

A proposed visitor levy of around £2 a night is being considered by Cambridge BID and Cambridge City Council.

Councillors said they hoped the new charge could be a positive thing for the city by creating a new funding pot for investment in the city.

The visitor levy is proposed to cover people staying overnight in hotels with 10 rooms or more in the Greater Cambridge area.

Under the current plan, the charge would be £2 a night for the first two years and £3 a night for the following three years.

If agreed, the charge is proposed to be introduced from January 2025.

A report published by the city council said it was estimated the charge could bring in £1.5million to £2.6million a year, based on an average occupancy of between 66 per cent and 76 per cent.

If introduced the charge would not cover Airbnb’s, self-catering units, or smaller guest houses with less than 10 rooms.

It would also not apply to places where visitor accommodation is a secondary part of the business, for example, pubs that offer guest rooms.

The city council report said it could not be mandated for the visitor levy to cover the university Colleges when its rooms are let out on a commercial basis at certain times of the year.

However, the report said a voluntary agreement is being explored with the colleges.

At a meeting of the city council’s strategy and resources scrutiny committee on March 25, councillors shared their support of the plans.

Councillor Karen Young said she thought it sounded like a “very good thing to do”, but questioned why the charge would not cover Airbnbs and other forms of short-stay visitor accommodation in the city.

It was explained that the current system for a visitor levy was based on business rates. Councillors were told there was potential for this to change in five years when a new decision would have to be taken on continuing the levy.

Councillor Cameron Holloway said he thought it was a “great initiative” and said it could be “really positive for the city”.

He also highlighted a number of suggestions for where the money raised by the charge could be spent, including finding a way to encourage coaches with tourists to use the park and ride sites, and homelessness prevention work.

Cllr Holloway also said the city council was facing potential “big cuts” in the coming years, and said he would like to see some of the money being used towards helping the authority to prevent savings it would “otherwise have to make”.

Councillor Tim Bick also asked if the money could be used to fund capital projects if it was decided a new facility could be needed.

He added that he hoped the visitor levy was seen as a “positive development” for the city, and that he hoped it could meet both the interests of the tourism sector and the broader interests of people living and working in Cambridge.

Maria Manion, chief executive of Cambridge BID, said capital investments could be considered, highlighting that new wayfinding infrastructure was something already being looked at.

She added that the money raised from the levy was likely to be used up quickly, but said it could also offer the opportunity to enable other sources of funding to be found as well.

Councillor Alice Gilderdale, executive councillor for community wealth building and community safety, said while the visitor levy could offer an “exciting new pot of funding” she said it would not be a “silver bullet”.

The committee councillors voted unanimously to endorse moving forward with work to introduce the new visitor levy.

However, the charge can only be introduced if it is supported by over half of the hotel owners who would be covered by the charge.

A ballot of these businesses is due to be held in the summer.