The government is being urged to cut EU red tape with a policy change that could generate an additional £2.2 billion in expenditure, create 40,000 new jobs and reduce the cost of domestic holidays.

The call comes from the Tourism Society which argues that the new EU Package Travel Directive will be detrimental to the UK’s domestic tourism industry due to the poor drafting of the definition of ‘package’.

Government has an opportunity to address the problem by inserting a clause in the new regulations stating that the definition of a package will change so that it must include transport when the UK leaves the EU.

The directive has to be implemented in the UK by July 2018 through a revision of the Package Travel Regulations.

A package holiday is defined under the directive as the purchasing from one supplier of two out of three services – accommodation, transport or another tourism service.

If a B&B, guesthouse or hotel provides a value-added offering, such as tickets to a local attraction, they are deemed to be a tour operator under the directive and therefore legally responsible for all parts of the product.

This is a “significant risk” for the 170,000 micro-businesses and SMEs that comprise the UK domestic tourism industry, meaning accommodation providers are not offering value-added products, therefore consumers will pay higher prices.

Research by the Tourism Alliance suggests that removing this red tape will boost the UK’s domestic tourism industry.

A survey of members regarding the directive found:

· Businesses estimated the change would increase revenue by an average of 9%

· 91% of businesses stated that providing value-added products would grow the domestic tourism market and 82% said it would make the UK a more attractive destination

· 66% of businesses agreed that providing value-added products would improve seasonal spread

Tourism Alliance director Kurt Janson said: “By leaving the EU our government has the opportunity to remove unnecessary EU red tape which is proving detrimental to the UK domestic tourism market.

“The government is currently in the process of translating EU Package Travel Directive into UK law and we urge them to address the definition of package, a change that would generate billions for the UK economy and stimulate job creation.

“It’s imperative that the UK continues to be a welcoming and competitive tourism destination, and the added-value propositions provided by our accommodation providers help to ensure this.”

Domestic holiday packages account for just 3.9% of the domestic tourism market compared to roughly 40% of the outbound market, according to the 2014 GB Tourism Survey.

Removing EU red-tape will not affect consumers’ rights and protections but it will reduce the cost of domestic holidays, according to the Tourism Society

The primary purpose of the directive and the regulations is to protect consumers who are taken on holiday by tour operators, providing consumers with two main protections, repatriation and liability.