Greece’s Hotel Sector Reacts Strongly to Stayover Tax Upcoming Increase

Greece’s hotel industry is reacting against the government’s intention to raise the so-called “stayover tax”, a daily accommodation fee charged to hotel guests in the country.

The announcement of the upcoming increase was made by Greek Prime Minister Kyriakos Mitsotakis during his speech to the nation at the 87th Thessaloniki International Fair (TIF). The Greek PM highlighted that revenues from the stayover tax increase would help finance a specially created natural disasters emergency fund.

Ιn force since January 1, 2018, the stayover tax is imposed on hotel guests for the daily use of rooms in hotels or lodgings (rooms/apartments to let). The stayover tax right now foresees a surcharge of 50 cents at one- and two-star hotels, 1.50 euros at three-star hotels, 3.00 euros at four-star hotels and 4.00 euros at 5-star hotels.

From the beginning of 2024, guests in Greece staying at:
– one- and two-star hotels will be charged 1.5 euros
– three-star hotels will be charged 3.00 euros
– four-star hotels will be charged 7.00 euros
– five-star hotels will be charged 10 euros.

The announcement of the increase of the stayover tax – originally introduced during the economic crisis as part of Greece’s bailout agreements – took the Greek tourism sector by surprise and triggered reactions.

The Greek Tourism Confederation (SETE), the Hellenic Hoteliers Federation and a number of local hotel associations across the country sent letters to the government requesting to enter into a dialogue on the matter.

According to the tourism professionals, the increase will be a blow to the Greece’s tourism competitiveness and make the country more expensive for travelers. Many hotel associations claim the rise is “unfair” as it charges a flat rate on all hotels regardless of their location. They have called for the levy to be reassessed if not abolished completely.

SETE

Following the PM’s announcement, SETE sent an official letter to the government stating that the increase in the stayover tax at rates of 150-200 percent, without prior consultation, causes concern, as it acts as an “obstacle” to the competitiveness of the wider Greek tourism product.

“We recognize and respect the need to restore the damages from the natural disasters that hit the country. However, the financing of the natural disasters fund cannot be the responsibility of only one sector of the Greek economy,” SETE said.

SETE requested for an immediate consultation between the government and tourism professionals, “so that the challenges can be faced together, in the most beneficial way for the whole of society and always with a view to sustainable development”.

Hellenic Hoteliers Federation

Hellenic Hoteliers Federation President Grigoris Tasios called on the government to re-examine and redesign the stayover tax taking into consideration hotel location, size, special circumstances, room rates and adjust based on those factors instead of being a flat charge.

According to Tasios, the government has the opportunity to review the measure more rationally in order to generate the expected results in the joint effort to deal with the climate crisis without the risk of damaging the country’s competitiveness as a tourism destination.

Thessaloniki Hotels Association

“The government announced the rise to the stayover tax without taking into account the particularities of each region and the huge discrepancies in the rental prices of each room,” the Thessaloniki Hotels Association said, highlighting that there will be many cases of hotels where the specific fee will reach or exceed 10 percent of the room rental price.

Speaking to the media, the association’s president, Andreas Mandrinos, gave an example of how the stayover tax is unfair: “A guest at a five-star hotel in Xanthi that charges 80 euros will have to pay 10 euros, the same as a guest in a five-star hotel on Mykonos that charges 500 euros per night… It’s not a matter of the destination but it’s a matter of the price per night… It shouldn’t be the same charge.”

Rhodes Hotel Association

“As we try to recover from the natural disasters that hit our island; as we struggle to continue being an attractive destination by competing with others with lower VAT, income tax… this measure also comes to decisively affect our local economy and society,” the Rhodes Hotel Association said.

The association pointed out that the new tax burden on the tourist product, which by a large percentage raises the accommodation cost for tourists, will drastically affect any possibility of extending the tourism season.

“We are sure that you know that our visitors have many other options (for holiday) and are not forced to come to our country under any circumstances,” the association said in its letter to the government officials.

Hoteliers Association of Kos

The Hoteliers Association of Kos highlighted that Greek tourism is already burdened with taxation and increased costs at all levels (high prices to products, inflation, energy, labor costs).

“Any further imposition or increase in tax – even if it is borne by the consumer, has the effect of making our product even more expensive. It is quite clear that the orderly operation of our businesses and, above all, the competitiveness of the final product offered will be affected, especially when our competitive destinations (Turkey, Spain, etc.) operate under much more favorable conditions.”

The association called for a consultation with the government to review the stayover tax increase measure, so that all hoteliers “contribute fairly and proportionately”.

Heraklio Hoteliers Association

“The increase in the stayover tax basically sends the message that visitors must pay for choosing (to holiday in) Greece,” the Heraklio Hoteliers Association said, adding that the stayover tax in other countries is a levy attributed to the municipalities and remunerative.

“Obviously, this is not the case here,” the association said and called on the government to review the way the stayover tax is charged, since right now it is not a “fair measure”.

Rethymno Hoteliers Association

On the other hand, the Rethymno Hoteliers Association have called for the stayover tax to be abolished altogether.

“Our permanent suggestion is to abolish the stayover tax… Instead, municipal fees of a remunerative nature should be imposed and revenues should be given to the municipalities for the creation – improvement of infrastructure that will contribute to the sustainable tourism development of each region.”

Hoteliers Association of Evia

The Evia Hoteliers Association pointed out that the continuous increase in prices for visitors to Greece will have the opposite effect on tax collections.

“It will also make the financial results of hotel businesses difficult, since it is certain that overnight stays will decrease dramatically,” the association said.

Hotel Owners’ Association of Magnesia

The Hotel Owners’ Association of Magnesia requested for the government to scrap the stayover tax altogether. The request was one of the many the association included in a letter to the government, calling for immediate measures that will support ailing enterprises affected by the floods of Storm Daniel earlier this month.

“A large part of our destination has suffered biblical destruction,” the association stressed.

Among other demands, the association called for the suspension of employment contracts; the suspension of tax and social security obligations; reduced VAT on heating oil and gas; and for the stayover tax to be abolished.

The increase of the stayover tax in Greece is expected as of January 2024.