Tuesday , May 18 2021

More difficult for the hotel industry after travel reports: – It's dramatic – Hotell – Næringsliv

"It is difficult with the unpredictability that we have experienced in recent years with our framework conditions, and in particular with the increase in VAT and wealth taxation," says Director Sigmund Straand at the Hotel Straand Hotel in Vrådalu, Telemark.

Two years have passed since the first 17-year parliamentary report on tourism was presented, where the government emphasized the need to ease the creation of value and profitability in the tourism industry.

Straand, who is the fifth generation managing the hotel since 1864, believes that hotel business has become more difficult since then.

He was supported by NHO leader Reiseliv-Kristin Krohn Devold. He had long been dissatisfied with what had happened in the Storting report.

– More than one in three hotels still has deficits a few months a year, says Krohn Devold.

Now her impatience increased. In a letter addressed to the Minister of Business for Torbjørn Røe Isaksen (H), Krohn asks Devold for better framework conditions for tourism.

"Very disturbing"

It speaks of lower profitability and pessimism in the industry, and that the promises of tax relief are not met.

– Many companies are concerned about prospects and for good reasons. So far, we have seen little influence from the government when it comes to fulfilling the promise of better framework conditions, says Krohn Devold.

She, among other things, believes that VAT on overnight stays is too high. Six out of ten tourism companies respond to NHO's financial barometer that the national VAT growth rate from 8 to 12 percent since 2013 has affected operating margins.

Director Straand says the VAT search went outside the hotel. The company ended in 2017 in a minus operation.

– We are now negotiating with big tour operators on agreements for 2021 and we notice the effect that there may be more ghosts in the sack. We are dependent on price increases to cover our other costs, and it is eaten when VAT is raised overnight, he explains.

Krohn Devold believes that it is "very disturbing" that many people react to a VAT increase affecting the company's margins.

"Norway needs growth and jobs, and then we need the tourism industry with devotion and optimism," says Krohn Devold.

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Straand hotel.

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Straand hotel.

The hotel manager points out that as a small hotel community hotel is an important foundation stone that creates taxes and revenues and is at the same time a major employer.

"We know these roles, but it gets harder," he says.

"Must clarify"

Business Minister Torbjørn Røe Isaksen (H) does not want to comment on the case, but is referring to the response sent to NHO Reiseliv.

It says here that the government's reduction in discounts on the valuation of commercial real estate negatively affected parts of the tourism industry as the tax base and tax demand for commercial real estate, including hotels, increased.

In the 2017 tourism report and the 2018 State Budget, the government announced that it intends to propose a reduction in property tax for investments in hotels and other accommodation facilities by increasing the discount for valuation.

"Before introducing such a rebate, it is necessary to clarify whether and how it can be implemented in accordance with the rules of the EEA Agreement on public support. The Ministry of Trade and Industry, together with the Ministry of Finance, discusses with ESA in order to this clarified, "writes Røe Isaksen.

Hotel Director Straand says there has been an increase in property tax of 43 percent between 2013 and 2017, as the discount on discounting has been reduced.

"It's dramatic and means we need to lose the job unnecessarily," he says.

The price drop

Krohn Devold also points out a survey by Peter Wiederström's hotel analyst at Wiederstrøm Hotel Consulting. It is shown that the rooms in 10 of the 11 Norwegian hotels in Veldhoven have fallen in price over the last ten years, if they are adjusting to a 23.3 percent consumer price index over the same period.

The analysis shows that the price of hotel rooms in Bergen in 2008 was NOK 932, while the price in 2018 was NOK 957. Adjusted for inflation, room rates did not rise in the city.

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