NEW YORK -- The
Czech Republic, a New European Union member, plans to raise its
value-added tax (VAT) on accommodations from the current 5% to 19%
-- closer to E.U. norms -- on Jan. 1. And hoteliers and U.S.
operators are up in arms.
Federation of Hotels and Restaurants, based in Prague, worries that
the hike will drive small hotels out of business by putting them at
a price disadvantage compared to Poland and Hungary.
negotiated lower hotel VAT rates -- 7% and 15%, respectively --
under their E.U. accession agreements.
Meanwhile, operators said
the VAT increase would put hotel rates in the Czech Republic on a
par with pricier western Europe -- and dissuade travel.
president of luxury operator Exeter International in Tampa, Fla.,
said his Czech bookings -- unlike those to booming Russia --
already took a hit due to higher air fares and new hotel pricing in
euros, which has soared 20% against the dollar in the last two
practically doubled this year, but not from the Czech Republic,
which was flat, he said. At the very high end of the market,
clients will usually go no matter what, but [the price rise] is
starting to enter into their considerations.
are worse off, said Eren Aksoy, vice president and director of tour
operations at Picasso Travel in Los Angeles.
The Czech Republic
was one of the few destinations where the price was right. Now were
seeing the last days of those big bargains, he said. This fall,
Picassos Nordique Tours division is offering a four-night Prague
stay at $359 per person.
I doubt Ill be able
to do that next year, Aksoy said.
reporter Kenneth Kiesnoski, send e-mail to [email protected].