Greek hoteliers will have to solve a “difficult equation” next year due to the increase of the value-added tax (VAT) rate on accommodation, according to the president of the Hellenic Federation of Hoteliers (POX), Yiannis Retsos.
During a press briefing to Greek journalists on Thursday, Mr. Retsos said that hoteliers will absorb a portion of the VAT increase and the remaining extra cost will be passed on to the price of the travel package.
“The challenge here is whether we can afford to absorb the increase and if we can remain competitive… This is a difficult equation”, he underlined.
The VAT imposed on hotels in Greece will rise to 13 percent from the current 6.5 percent rate as of October 1, 2015.
Greek tourism heading for a new record year, but…
The federation’s president underlined that despite capital controls, political instability and talk of a “grexit”, this year’s tourism performance reveals that the sector can become the main pillar in the new government’s strategic planning for the country to exit the crisis. (Greece will hold elections for a new government on September 20.)
According to the latest figures, Greece is expected to see some 26 million international visitor arrivals and revenue above 14.5 billion euros this year.
However, he stressed that despite these encouraging tourism figures, the majority of Greece’s hoteliers have not seen an improvement to their finances due to the discounted rates they were obliged to offer this year to attract customers in the midst of the country’s political and economic situation.
Road travellers boost arrivals
The number of tourist arrivals via road to Greece is expected to reach 10 million this year. Arrivals were recorded from the Balkan countries and new markets such as those of Slovakia, Poland and Hungary.
He added that road tourism has tremendous potential and underlined that improvements must be made at border entrance points in order to encourage more visitors.
On the other hand, the domestic tourism flow saw declines this season, as Greeks travelled less due to capital controls.
Hoteliers urge action against illegal accommodation
Mr Retsos also referred to the illegal accommodation units (residential apartments and houses) in Athens, which deprive bookings from hotels and taxes from the government.
He stressed that while Athens experienced a 26 percent increase in international arrivals during the first eight months of the year, hotel occupancy in the Greek capital rose only eight percent in the January – August period. “Where did these travellers go?” he said.
The federation’s president said that while the trend of short-term apartment rentals is global and can not be abolished, the new government must address the issue by detecting these establishments, setting standard regulations for guest accommodation and taxing the apartment owners accordingly.