A £1.25 per night tourism tax could be introduced in Wales from 2027, it has been announced.
Guests at hotels, B&Bs and self-catered accommodation would pay the visitor levy if councils decide to introduce it in their areas.
A lower rate of 75p would be charged for hostels and campsites.
The Welsh government said the money raised would help fund services in tourism hotspots, but critics say it will deter visitors.
The levy will be charged per person, per night, and will also apply to children.
The plans require a piece of legislation – which was published on Monday – to be passed by the Welsh Parliament.
If that happens, officials think April 2027 is the earliest date the tax could start.
Councils could charge more in future if they go through a consultation process and give 12 months’ notice.
Not all councils are expected to introduce the visitor levy, but if they did it would raise an estimated £33m a year.
Stays of more than 31 nights will not be taxed. Neither will people be forced into temporary accommodation or people in homeless hostels.
Officials said they wanted the tax to be simple to understand, so the same rate will be paid for adults and children.
The legislation explains how councils have to spend the money, which will be ring-fenced in their budgets for specific things.
They include promoting tourism, promoting the Welsh language and improving infrastructure or services used by visitors.
The policy was part of the co-operation deal signed between Labour and Plaid Cymru in 2021.
Conservatives have said it will risk jobs in the tourism industry, which employs 159,000 people – nearly 12% of Wales’ workforce.
In a report last year, MPs on the Commons Welsh Affairs Committee said they were concerned it could deter international tourists.
But Finance Secretary Mark Drakeford said it was “fair visitors contribute towards local facilities, helping to fund infrastructure and services integral to their experience”.
He added: “Visitor levies are common around the world, benefiting local communities, tourists and businesses – and we want the same for Wales.”
Anyone providing accommodation, including owners of short-term accommodation such as Airbnbs, will have to register under the law creating the tax.
Eventually, they will need a licence to operate to make sure they all follow the same rules and safety standards.
More legislation to create the licensing scheme is expected before the next Senedd election in 2026.
Visitors flock to the seaside resort of Tenby in Pembrokeshire, and Katherine John, who runs the town’s Morris Brothers department store, said staff struggled to park their cars and mobile coverage was poor in peak season.
But asking visitors to contribute with a tax “could be detrimental in my mind,” she said.
“Anything that can create a barrier to coming to the area could be an issue and footfall is what we need the most in the summer months
“If it’s something that’s specific to this area they [visitors] could look elsewhere.”
Tenby has lost its tourist information centre, but she said if money from a tax made up for that “then there is the balance and the argument for the tax”.
Rob Izzard welcomes visitors from all over the world to Pembrokeshire Alpaca Trekking and also has a glamping site at Manorbier near Tenby.
“If people have to pay a levy, no matter how small it is, it could affect them coming into our county,” he said. “If a neighbouring council decided not to do this it might be an unfair advantage.”
Helen Manley Jones, who lets a two-person cottage to holidaymakers in Newport, Pembrokeshire, said if the levy came in she would have to put up prices for the first time in four years to fund the cost.
“Which is a shame,” she said.
“I would like to keep it even because bookings have dropped and you want to encourage people to come and stay here.
“So it’s not really giving the right signal, I don’t think.”
She added: “A lot of people will reconsider whether they come in to Wales if they know they are going to be charged an extra holiday tax.”
In a four-year plan for the city, Cardiff council said it would “explore fiscal powers such as the tourism levy to support investment in the sector”.
Carl Kodurand, manager of the 21-bed room Lincoln House Hotel on Cathedral Road, just outside Cardiff city centre, said a £1.25 nightly levy would be “fairly small”.
“Nevertheless, I think if people are staying say for three or four nights, it all mounts up,” he said.
“The problem is how is that money going to be spent, where is that money going to be spent, and I’ve heard precious little on that subject.”
Samuel Kurtz of the Welsh Conservatives said: “We’ve been consistent in our opposition to Labour’s damaging tourism tax plans.
“A tourism tax would risk Welsh jobs at a time when businesses are already under siege from UK Labour’s increase in national insurance and when Wales’ tourism industry needs nurturing and support.”