Hospitality industry bosses attended a summit meeting with tourism minister Shaun Woodward yesterday (Wednesday) in an effort to stave off the threat of a controversial "bed tax" on letting accommodation.
The Tourism Alliance, representing 200,000 UK businesses, says a 5% levy on bedroom bills will cause major damage to the tourist trade.
Pubs with letting bedrooms and small licensed hotels will be hit hard by the proposed tax, which could add £100 to a week's accommodation bill and drive customers away.
The Alliance, which numbers leading brewing and pub trade associations among its ranks, says the tax would be "inequitable" because it would target only a small percentage of tourists.
The possible bed tax is one of the options being considered by the Lyons Inquiry, which is carrying out a local government finance review.
The Local Government Association has denied reports that it is officially backing a bed tax scheme but says that it welcomes the range of options the inquiry is considering.
British Hospitality Association deputy chief executive Martin Couchman said threat of the tax was still "very real."
Federation of Licensed Victuallers Associations chief executive Tony Payne said: "A bed tax would be extremely unpopular and hit thousands of pub businesses when letting accommodation is a growing revenue stream."
A Department for Culture Media & Sport spokeswoman said yesterday's meeting was an Olympics update but other issues could be raised.
"There are no government plans at present to introduce a bed tax," she stressed.