Victoria's Great Ocean Road will hopefully have more visitors enjoying the state's regional areas.

Victoria’s proposed tourism tax has been deemed “unfair” on hotel guests and likely to impact tourism numbers in the state, according to peak accommodation body Accommodation Australia.

A $5 levy on bookings for short term rentals and hotels is being considered as part of a major overhaul to Labor’s housing policy.

It follows Premier Daniel Andrews’ announcement last week that the state would no longer host the 2026 Commonwealth Games – which was expected to bring an influx of visitors to the state.

Accommodation Australia CEO, Michael Johnson, said the proposed tax would be a deterrent for travellers at a time when the tourism industry is still in a recovery phase.

“This new tax would see many travellers simply head to states like NSW and Queensland, or avoid Australia to save on costs, especially tourists from countries like China where Tourism Australia is currently campaigning to ‘Come say G’day’,” he said.

“The return of overnight international tourists is critical to Victoria meeting projected visitor number and spending targets – spending by international visitors is still less than half what it was in 2019 – down $4.6billion.

“Not only it is an unfair extra burden on hotel guests, it will have an impact on other tourism-related businesses in Victoria which have been doing it tough since COVID. It’s not time for Victoria to pull up the welcome mat to visitors.”

Johnson said the government should instead target “the unregulated accommodation sector” to help deal with the rental housing crisis.

Accommodation Australia Victoria General Manger, Dougal Hollis, said the tax would likely impact the state’s conferences and events business.

“A bed tax would create a significant barrier to Victoria’s attractiveness from a business meetings and events perspective, adding $895,000 of direct cost to our pipeline of 179,000 room nights and could lead event organisers to consider alternative options outside our state,” he said.

“Hotel occupancy levels are still below pre-pandemic figures and in the mid-sixty per cent range. This new tax sends the wrong message – that Victoria doesn’t welcome tourists, all to fix a rental housing crisis we are not contributing to.

“Instead, we should be doing all we can to encourage first time tourists from interstate and overseas to come here, not discourage visitors by placing an extra tax burden on people who want to come and spend their hard-earned dollars.”