Mayors will be able to introduce tourist taxes across England, the government has announced.
A day before the budget, communities secretary Steve Reed said mayors will be given the power to impose a “modest” charge on visitors staying overnight in hotels, bed and breakfasts, guest houses and holiday lets.
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The money raised is intended to be invested in local transport, infrastructure and the visitor economy to potentially attract more tourists.
Regional Labour leaders such as London Mayor Sir Sadiq Khan and Greater Manchester’s Andy Burnham have been calling for the measure.
However, the hospitality industry condemned the move as “damaging”.
The visitor levy will bring England in line with Scotland and Wales, which are already introducing tourist taxes.
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Officials said it would bring English cities into line with other tourist destinations around the world, including New York, Paris and Milan, which already charge a tourist tax.
They said research showed “reasonable” fees had a “minimal” impact on visitor numbers.
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Sir Sadiq said it is “great news for London” and said the tax will “directly support London’s economy and help cement our reputation as a global tourism and business destination”.
The Greater London Authority previously estimated a £1 a day levy could raise £91m, and a 5% levy could raise £240m.
Mr Burnham said the tax will allow Greater Manchester to “invest in the infrastructure these visitors need, like keeping our streets clean and enhancing our public transport system through later running buses and trams, making sure every experience is a positive and memorable one”.
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However, Lord Houchen, the Conservative Tees Valley mayor, said he will not introduce a tourist tax, adding: “Thanks, but no thanks.”
Conservative shadow local government secretary Sir James Cleverly branded it “yet another Labour tax on British holidays, pushing up costs for hard-pressed families, and yet another kick to British hospitality”.
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Kate Nicholls, chair of UKHospitality, warned the “damaging holiday tax” could cost the public up to £518 million, adding: “Make no mistake – this cost will be passed directly on to consumers, drive inflation and undermine the government’s aim to reduce the cost of living.”
The plans will be subject to a consultation running until 18 February, which will include considering whether there should be a cap on the amount.
