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Hoteliers Upset Over Government’s Refusal To Change Depreciation Rate

Greek hoteliers continue efforts to pressure government quarters to change depreciation rates for tax purposes from 4% to the 8% it was some two years ago. Representatives from Greek Hotel Chamber and the Association of Greek Tourism Enterprises say they are very disappointed that Economy Minister Nikos Christodoulakis and Development Minister Akis Tsohatzopoulos have not kept their promises to return the rate to 8%.

In a recent letter to both ministers, the Attica Hoteliers’ Association expressed its dissatisfaction as well. It explained that the 4% rate, especially for hotels now operating, is but one more wound against general competitiveness of the sector.

“In an era where the needs of international competition demand renovations every five to 10 years, the depreciation of an investment over a period of 25 to 30 years leads to an accumulation of non depreciated capital,” said the letter. “At the same time, the increased taxation on hotel enterprises will dry up needed capital for modernization with the end result being a drop in the unit’s level of operation.”

Hoteliers say they cannot understand the logic behind the government’s decision as all other buildings and installations continue to depreciate at 8% annually while hotels should get the best possible consideration, as they must modernize frequently.

In closing its letter, the hotel association said that “tourism is an economic activity of our country and the hotel sector is (tourism’s) basic support. Each decision you take at the expense of (hotels) will inevitably act negatively with regards to developments in employment and the general economy of our country.”

The Panhellenic Federation of Hoteliers last month also urged the government not to further lower accounting depreciation rates for the fixed assets of hotels in legislation being prepared. It said it would hold Economy and Finance Minister Nikos Christodoulakis personally responsible for a further deterioration in the competitiveness of Greek tourism.

The federation complained in a press release that the finance ministry was preparing to arbitrarily set maximum and minimum depreciation rates of 4 and 2 percent respectively, despite Mr. Christodoulakis’s promise to set up a special committee on the matter.

It called the prospect irrational and said it expected the maximum rate to be restored to 8 percent after its surprise halving last year. “The only logical explanation is that the ministry puts the interest of a handful of listed firms that wish to show higher profits before the thousands of hotel businesses struggling to modernize and remain competitive,” said the federation.

All this comes at a time when most of the capital’s hotel units have reached deep into their coffers to renovate. It is not just the Hilton, the Grande Bretagne and the Electra that radically broke with its past to show a shiny new face in time for the 2004 Athens Olympics, said the association’s president, George Tsakiris.  So far, members of the association have invested more than 600 million euros to renovate and upgrade their hotels, he said.

According to Greek Hotel Chamber figures, Athens offers visitors some 30,000 hotel beds, but this is considered a small number considering the number of tourism arrivals to Greece. But the hoteliers say the city has such a thin hotel capacity because the vast majority of some 12 million tourists Greece welcomes annually prefer to head directly to seaside resorts rather than dwell for a time in the city.

The average occupancy rate of Athens hotels hovers just above the 50 percent mark, says Mr. Tsakiris. Thus, in order to fill their expensively revamped hotel rooms, the hotel business is hoping the Olympics will turn Athens into a hub for culture and business conference travel.

In addition to hoping the 2004 Games will turn the less-than-laid-back Greek capital into a destination for high rollers, hotel owners are pressing the government to stop dragging its feet on a number of issues.

In particular, they complain that the state-run Greek National Tourism Organization has been unable to stage or garner funds for effective promotion campaigns abroad.

And besides an increase in investment depreciation rates to ease their renovation bill, hoteliers want a revival of stalled plans to bring Greece’s hotel-rating system in line with the internationally established five-star scale.

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