Barbados hotel group absorbs tax increase

BRIDGETOWN, Barbados, Thursday March 31, 2011 – When an increase in Value Added Tax (VAT) rates on hotel rooms takes effect in May, at least one hotel group won’t be passing on the hike to its guests.

The Mango Bay Hotel Group has announced that it will maintain its current rates through 2012 and absorb the increase for people booking at the all-inclusive Mango Bay and Island Inn Hotel.

From May 1, the VAT on holiday accommodation increases from 7.5 percent to 8.75 percent.

“We want to protect the interests of our repeat guests as well as new visitors, and in a time of economic struggles we have to keep our customers in mind,” said Chairman of Mango Bay Peter Odle.  

“Having our hotels paying the tax increase is our ‘thank you’ to guests for spending their Barbados vacation with us,” he added.

Tourism stakeholders have expressed concern about the 1.25 percent VAT hike, saying that the entire industry will be affected.

Well known hotelier Adrian Loveridge also questioned the timing of the increase.

“Individual accommodation providers will be left with the dilemma of either attempting to pass on the extra tax or being forced to absorb it. Yet another element of doing business that clearly has not been budgeted for. Would it not have been better to introduce the rate hike at the beginning of the next winter season?” he wrote in a commentary in a local newspaper.

The 8.75 percent VAT is half the standard rate now being paid by consumers. The general VAT rate increased from 15 to 17.5 percent last December.

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