Hotels plan last minute discounts

The Balearic government may decide to start spending money raised by the tourist tax before it actually gets its hands on the cash. Apparently just a minor alteration to the government's expenditure plan, which neither needs the approval of the cabinet nor parliament, the government could start investing tourist tax funds, the first instalment of which hoteliers are not due to pay the government until September. The government has worked out that this year, the tourist tax will raise an extra 30 million euros (5.000 million pesetas) for environmental projects. However, until the hoteliers decide how they will be charging and paying the tax, they have two options to chose from, the exact figure remains to be seen. If the hoteliers pay the tax into government coffers directly, there will be the 30 million euros in the kitty, but should they opt for the option of paying in instalments, the government will receive 35 per cent less. After the Easter break, the special inter-departmental commission set up to administer the tourist tax funding will meet to decide on the first phase of projects. The commission has postponed a number of meetings over the past month, pending a deal between the government and tour operators to delay the tax. The International Federation of Tour Operators (IFTO) has written to the Balearic President Francesc Antich, warning of the possible dangers of an “uncontrollable backlash” from tourists over the tax and that it will further damage the Balearics' image. IFTO has also asked Antich how the government intends to refund the tax to tourists should the Constitutional Tribunal in Madrid eventually rule against the tax. At the moment the court, which is still considering its verdict, has lifted a freeze on the tax going ahead while it studies central government's appeal against the levy. The Balearics' leading hotel chains, yesterday said that it is virtually impossible that bookings will recover to match last year and that, in many cases, the only way to revive the struggling Balearic holiday sales is for hotel chains to start cutting prices and offering attractive “last minute” discounts. The local government does not want hotels to start slashing prices, but to most of the hotel sector, it makes good business sense.