Up to 30% fewer guests as VAT increase on accommodation

New research confirms: VAT increase costs accommodation business, jobs and tourists

Koninklijke Horeca Nederland (KHN) is making an urgent appeal to politicians to reverse the proposed VAT increase on lodging from 9% to 21%. New research - commissioned by the Ministry of Finance - shows that up to 30% of hotel guests will stay away. Moreover, the exact revenue for the treasury is a lot lower than what the cabinet has taken into account.

The latest report Outcomes impact analysis VAT on accommodation was commissioned by the Ministry of Finance and prepared by research firm Significant*. This report shows that the VAT increase leads to a sharp drop in demand and turnover in the accommodation sector, especially for entrepreneurs in price-sensitive segments and in border regions. 

Direct threat to thousands of entrepreneurs

The report confirms the results of research by CELTH and Decisio, which KHN commissioned earlier this year. In the base scenario, an average overnight turnover drop of 8.5% is expected as a result of the VAT increase. The choice experiment shows that accommodation providers will lose up to 30% of their guests as tourists move out to foreign hotels. An effect even greater for budget hotels in border regions. This is a direct threat to the future of thousands of hospitality operators.

KHN president Marijke Vuik: "Thousands of entrepreneurs are at risk of losing guests and turnover because of this. Fewer guests means less income, fewer jobs and less room to invest in their businesses and their people."

"Choose policies that offer perspective"

The Significant report does not comment on the exact yield to the treasury. Celth and Decisio's study shows that the VAT measure will generate only 250 million in extra taxes for hotels, while Dutch businesses will lose 400 million in turnover. According to Celth and Decisio, the VAT measure will also cost 1,500 FTEs in jobs.

Less turnover and a lower profit margin means that hospitality operators are also hit in their ability to invest in quality and sustainability. In particular, smaller accommodation providers with fewer economies of scale come under unnecessary and undue pressure.

"We call on politicians to reverse the VAT increase and opt for policies that offer perspective so that everyone can continue to enjoy hospitality, tourism and the vibrant cities and village centres that make the Netherlands so beautiful," said Marijke Vuik. 

* Outcomes impact analysis VAT on accommodation | Lower House of Parliament