Originally Posted by
Raffles
If the rate needs to be £100 to get heads on beds, rooms will be priced at £100 irrespective of whether VAT is 1% or 25%.
What hotel in its right mind after 3 months of zero revenue is going to reduce its room rates from £100 to £85 when it can fill its rooms at £100?!
The only exception may be at hotels which are reliant on business customers, but there aren't many of those open at the moment. The £100 room that used to cost me £86 because I can reclaim the VAT now costs me £95. In these circumstances, there IS price elasticity at play and hotels may come down.
It would be different if rates were headlined without VAT. that was something IHG used to do in the UK for "business" hotels, but I think it's they stopped that.
It's an odd intiative - effectively giving cash to hotels, but not doing much to boost demand/consumption. Unless of course tpunters are fooled into thinking VAT reduction= price reduction