The Debate CRYSTAL CLEAR VAT RATES MUST BE
Hotels in London can quote VAT inclusive rates when they want to, but the all-too-common VAT exclusive rates hinder price transparency for buyers. Read on for three varying views
THE TMC Margaret Bowler, Director Global Hotel Relations, HRG
London hotels have presented their rates exclusive of VAT for a number of years now. They do this so that they are able to compete effectively with hotels in other destination cities around the world. Excluding VAT from their rates enables them to be on the same platform as other international locations, such as Dubai, Hong Kong, Moscow and New York. Hotels in London used to quote their rates as inclusive of VAT but hotels in other international destinations presented their rates as exclusive of both VAT and other taxes. This practice has resulted in London hotels pricing appearing on a like-for-like basis. The approach provides visitors with an even platform if they look at list pricing for key international locations. Hotels in other parts of the country have not followed this pattern of pricing because the bulk
of their business is domestic. We believe that this is common and given the large volume of business travellers requiring accommodation in London – and the other international cities – the practice is replicated in most hotels in the city used by business travellers, not just within the large hotel groups. For clients, this presents something of a mixed
bag, and our advice is always to be mindful. Some clients want all prices to be consistent for the UK, ie VAT inclusive, and if that’s the case, London hotels will always comply. And if they are a company that can reclaim VAT they must be aware that, when working out what they are expecting to get back, their average rate will be higher because they have to add on the VAT at its current rate. During RFP season it is essential that clients
ask what is included in the price and also determine how they want their pricing to be – net or VAT inclusive so that they can benchmark to assure the very best programme to meet their
commercial objectives. This approach will also ensure that benchmarking is robust and provides real value and benefit to clients on a like-for-like basis. There is a lot of analysis that takes place to determine what the rate is and if it's good value or not. From a booking point of view it goes without saying that hotels that are pricing net are going to look much cheaper when compared to those London hotels that are pricing with VAT included. This can cause problems for corporate clients who have to deviate from their hotel programmes because of a lack of availability, particularly when using online booking tools. Whether a client is working on lowest rate or within a rate cap, if the rate cap is meant to include VAT, it is imperative that it does to avoid booking outside of the rate cap. In summary, when it comes to reviewing and understanding hotel pricing and exactly what is and isn’t included in rates, it really is a case of ‘buyer beware’.
22 I THE BUSINESS TRAVEL MAGAZINE
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