The tourist tax will make or break 2001

Providing the government resolves the fuel dispute and the controversial tourist tax is not introduced in the Balearics, then 2001 will be a “good year” according to the Majorcan Hotel Federation. Overall, hotel bookings in Majorca have fallen by six percent this year and profits have dropped by between ten and 15 percent. But the Federation and leading hoteliers are confident that providing the fuel dispute is resolved and that the middle market is not hit by an increase in the price of package holidays, next year will show a marked improvement in bookings. But, while it appears everything is being done to regulate the fuel industry across Europe, the biggest concern is the tourist tax. The Hotel Federation said yesterday that the Government knows the organisation's opinion and it will not change as the hotel sector will be the only part of the market hit by the tax. The Federation said yesterday that if the tax is to be paid only by hotel guests, then between 10 and 12'000 million pesetas will be raised by the levy every year. But with between 25 and 30 percent of visitors to the island staying in non-regulated and illegal accommodation, the government will be losing out on a potential extra 10'000 million pesetas in untaxed holidaymakers. The hoteliers believe that if there is not enough money for the environment then it is the government's fault and problem. Hoteliers are also worried that the tax will make the Balearics less competitive and this year, the main reason for the drop in tourism and hotel bookings has been because of stiff competition from other Mediterranean destinations. The six percent fall in bookings this year forced hoteliers to reduce their prices, in July some hotels slashed their rates by as much as 30 percent in some of the island's key resorts while others let staff take early holidays as there was not enough work. Hoteliers rejected accusations that they priced themselves out of the market. The Federation explained that 90 percent of their bookings are made overseas as part of packages with the tour operators setting their own prices.