'VAT increase on accommodation hits budget tourism and border regions hard'

The planned VAT increase on accommodation from 9 to 21 per cent is putting pressure on bookings at hotels and holiday parks. Research by Significant APE, commissioned by the Ministry of Finance, shows that bookings may fall by 30 per cent*. This is especially true for budget accommodation and in border regions. As a result, tourists are diverting to cheaper alternatives just across the border.

The planned VAT increase weakens the competitive position of Dutch accommodation providers, precisely at a time when the sector is recovering and needs future-oriented investments. A drop in bookings directly affects the earning power of entrepreneurs in the sector. Fewer bookings means less turnover and less room to invest in staff, sustainability and innovation.

One solution lies in introducing a transitional regime, for instance by increasing the rate by around two per cent every year for five years. This gives entrepreneurs time to adjust their pricing strategies and cost structure and invest in quality and experience.

The government, with the finance ministry in particular, is called upon to consider the economic and regional impact of the increase. Without supporting measures, there is a risk of contraction in a sector that actually contributes to employment and regional development.

* The report stressed that it is difficult to estimate what the impact of the VAT increase will be and that it varies by region and accommodation type.