Overnight Stay Tax Controversy within the Greek Hospitality Sector

 

Tax, Tax increase, Greek economy, Tourism, Overnight Stay Tax

The Greek Ministry of Tourism has implemented the Overnight Stay Tax as from January 1st, 2018; being its main purpose to drive revenues while reducing the national debt.

The Overnight Stay Tax implies an extra fee that adds to the cost of the room which ranges from €0.50 to €4 per night depending on the official rating of the accommodation facility. A tax that guests are expected to pay when checking in.

The tax has been received with reluctance as it goes into effect right after Greece closes a year distinguished by a 9% increase in tourism arrivals, a number that adds to the even better forecasts for 2018, while tourism keeps expanding and numbers also show growth in occupancy in the hotel sector as well as a 13.9% increase in turnover.

Mr. Yiorgos Tsarikis, president of the Hellenic Federation of Hoteliers, has stated that this tax is bound to cause a decrease in the demand while the Greek tourism product will be affected.

As many others in the industry believe, the tax will be either directly passed to the consumers or absorbed by the hotels, which will have, in any case, a negative effect.

In Heraklion, Europe’s fastest growing tourism destination for 2017, the news was not well received either.

Mr. Lefteris Karatarakis, CEO of the Lato Boutique Hotel and the eco-friendly Olive Green Hotel, argues that “this is purely a collective measure which will definitely harm profitability and increase tax evasion”, he concluded during a conversation with Greek Reporter.

According to different organizations, it has been estimated that the Overnight Stay Tax might imply a 1.9 % increase in the average accommodation rate, which might result in a reduction in demand of about 2.5 %.

On the other side, the government has stated that it is willing to review the tax in the long run.