Shetland Tourism Faces New Challenges: Rising Licence Fees and Their Impact on Local Businesses

Published on January 17, 2026

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However, faced with the escalating criticism from tourism operators, the Shetland Islands Council (SIC) has tried to justify the large increases in the fees for the licensing of short-term let providers. In fact, the council managed to almost double the fees for operators of short-term let businesses. Nevertheless, the council explained the large increases in the licensing costs, which have been met with criticism from tourism operators alleged to be suffering from the imposition of “unfair tax” by the council.

A Growing Demand for Short-Term Let Licences

Shetland Islands, known for their picturesque landscapes and unique cultural heritage, have become an increasingly popular destination for both domestic and international tourists. Over the last few years, short-term accommodation, including self-catering apartments and holiday lets, has seen a significant increase in demand. In 2024 alone, over 500 applications for short-term let licences were submitted, a number far exceeding the 340 initially anticipated by the council. This surge in demand for accommodation, coupled with administrative challenges, has put additional strain on the council’s resources.

The SIC explained that the increase in licence fees was necessary to cover the additional time and resources spent by staff on processing applications. Many applications were incomplete, requiring officers to spend extra time seeking missing information, ensuring compliance, and addressing complaints from both accommodation providers and guests. The council argued that these factors had led to increased service delivery costs, which the new fees aim to address.

Council’s Justification for the Fee Increase

The Shetland Islands Council has been clear in its explanation of the fee increase. When short-term let licences were first introduced by the Scottish Government in 2022, the SIC’s fees were among the lowest in Scotland, set at £94. However, with the renewal period approaching, the council raised fees to £200 for most accommodation providers, with larger establishments potentially paying as much as £500.

According to the SIC, this fee hike is part of an effort to better align the cost of providing the licensing service with the actual operational costs. “These changes have not been made lightly,” a council spokesperson stated. “They are essential to ensure the sustainability of the service and fairness across all areas.” The updated fee structure is now based on the number of occupants in each accommodation rather than the number of rooms, bringing Shetland in line with other Scottish local authorities.

A comprehensive review in 2024 revealed that the SIC’s previous fees were significantly lower than those being applied elsewhere, prompting the council to move to a more simplified and fairer fee structure. The changes, which were approved by councillors in February 2025, aim to standardize the licensing system while ensuring the council can meet the growing demand for accommodation and effectively manage the increasing workload.

Concerns Over Rising Costs and Impact on the Tourism Sector

Despite the council’s reasoning, many tourism providers on Shetland have expressed concern about the impact the fee increase will have on the sector. With travel costs already high for visitors to the islands, tourism representatives are worried that this additional charge will further deter tourists and make it harder for local operators to remain competitive.

Amanda Hawick, chairwoman of the Shetland Tourism Association, voiced strong criticism of the fee hike, calling it “another unfair tax” on the local tourism sector. “It’s sending completely the wrong message,” Hawick said. “It’s very worrying and you have to question how much will the council keep on hiking these fees.” Many tourism operators fear that this is just the beginning and that further increases are likely, which could ultimately damage the reputation of Shetland as a tourist destination.

Voices of Local Tourism Providers: Shock and Discontent

One of the most vocal opponents of the fee increase has been Niki Steenkamp, who runs Voortrekker Shetland, a complex of three self-catering apartments in Levenwick. Steenkamp expressed her shock at the substantial price increase, describing it as an “utterly shocking” development. “It’s just another stealth tax – another money grab,” Steenkamp said. “These kinds of things never come down in price; they just keep going up and up. It’s unfair and it’s unacceptable.”

Her sentiments are echoed by other small accommodation providers, who are struggling to cope with the increasing costs of running their businesses. In an area like Shetland, where tourism is an important part of the local economy, even a modest increase in fees can have a disproportionate impact on operators, especially smaller establishments that rely heavily on short-term lets.

The tourism sector in Shetland is already facing a number of challenges, including the high cost of travel to the islands, limited availability of accommodation, and the seasonal nature of tourism. Many providers fear that the rising cost of licences could add an additional layer of difficulty for small businesses already grappling with these challenges.

The Broader Context: Rising Tourism Costs and the Strain on Local Businesses

The increase in short-term let licence fees in Shetland is part of a broader trend in which local governments across the UK and beyond are seeking to regulate the growing short-term rental market. While platforms like Airbnb and Booking.com have made it easier for property owners to rent out their spaces, they have also created challenges for local authorities, including rising housing prices, overcrowding, and concerns about the quality of accommodation.

In Shetland, the rapid increase in demand for short-term lets has led to concerns about the strain on infrastructure and the local environment. With a limited number of accommodations and a growing number of visitors, there are fears that Shetland could experience the negative effects of overtourism, such as damage to natural resources, overcrowding, and a decline in the quality of life for residents.

Balancing Regulation and Growth: The Future of Shetland Tourism

As Shetland continues to attract more visitors, it will be crucial for local authorities and tourism providers to find a balance between growth and sustainability. The increase in short-term let licence fees is a response to growing demand and the need for effective regulation, but it also highlights the challenges faced by smaller accommodation providers. Moving forward, the Shetland Islands Council will need to carefully consider the long-term impact of these fee hikes and ensure that they do not undermine the success of the local tourism industry.