Hotel not passing VAT rate reduction on

[billysboy]

I have a weeks holiday in Southwold booked that was booked earlier in the year

The hotel recently contacted me for card for a deposit which was fine
I asked them to confirm the room rate which they did
the same week the VAT was reduced from 20% to 5%

I left it a week or so and called them to ask if there had been any adjustments as a result to be told yes but they had increased their prices

I was told that the hotel had put their prices up as per terms and conditions small print and that they were taking the VAT off the new increased rate

So my original booking was £2300 wahich after their Vat " discount " went to £2200

I am aware we are in the middle of a crisis however Adnams are a huge company ,
I already understood that with a reduced menu , social distancing etc this would not be the same experience as the previous year ,however I thought I could live with this

AIBU here or are they taking the piss

Its left a nasty taste in my mouth

If you want hotels to go to next year, then you have to accept that they need the benefit of the vat reduction.

Hotels and most industries selling to the general public tend to quote vat inclusive prices.

There's a legal difference between saying something is X, vat included (in which case the hotel would benefit from the vat reduction) or saying something is X plus VAT (in which case the customer would benefit).

Some businesses may choose to pass the VAT saving on to the customer. Generally they won't - the number of additional custom they can attract by setting prices 15% lower will in many cases be lower than the amount they can save by keeping an extra 15% on every existing cases - particularly for hotels who may be up to max occupancy in any rate throughout the summer, so has no need to attract additional custom.

i get why people think a VAT cut is meant for them as in the past is has been.
VAT was always £17.5%, then after the 2008 crisis when liquidity dried up it was reduced to 15% and this WAS meant to be a cut to prices to stimulate to help the consumer NOT the Business so this is the normal way of things and Businesses at that time that did not pass on the cut were accused of profiteering. Then VAT went up to 20% again where it has stayed.
But this crisis is very very different where it is the business that is really affected and NOT the consumer (who has mostly stayed in work, been furloughed, self employed grants etc and apparently savings have shot up) so it is a cut for the business in this case and aimed at saving jobs.

@lougle

How do you mean clearer? Do all restaurants now have to re-print their menus with the 5% VAT then turn around and announce an increase in their prices. We know VAT has been reduced, it's the choice of the business how to act on the reduction, whether they reduce their prices, or keep their prices as they were to prevent them from going under. There have been thousands of job losses across the country, many in hospitality, restaurants can't turnover nearly as many tables as they normally would. I really can't get hung up on a 15% difference and whether the place I'm staying at is passing it on to me or keeping it to prevent their business failing.

I've never booked a hotel on a £PRICE +VAT basis, I've always booked it on an inclusive basis, and so wouldn't expect to see a direct reduction in vat.

If you are paying an inclusive price, the deal is that your price is set, and the business takes the risk with regard to the the costs of providing that service potentially changing. So if minimum wage goes up and they have to pay cleaners more, or the cost of ingredient for your cooked breakfast go up, or VAT goes up, then they take less profit, but your prices stays the same. In the same vein if costs (including VAT) come down, they make more profit, but again, your agreed price stays the same.

If VAT had been raised, would you be prepared to have paid an extra amount on top of your agreed, fixed price? Do you go back to suppliers every time minimum wage is raised or fuel prices rise or the cost of raw materials rise and offer to pay them a little bit extra since their operating costs have gone up?

You are misunderstanding the fixed price you agreed, and being very greedy.

YABU
The costs have hugely increased and prices would have increased without this. Places are only able to accommodate a small number of guests compared to capacity in their bars / restaurants. In Wales they can only operate outdoors. They have been paying bills with no income for months.
In short I would be happy to offer you the reduced vat rate but it would cost you more to stay as I would have increased the net price.
Many places are struggling to provide the services that they did pre-covid. Look at Holiday Inn for example - self service breakfast buffet for hot and cold food so that is not permitted.
Most B&B / hotels allowed self service for juice/ coffee /toast /ambient items such as fruit - no longer allowed. Where I work staffing has had to double to work within the guidelines and provide service. I really hope we survive this. Most guests have been very understanding but there have been a handful that have been completely inconsiderate dicks.

Yabu

The vat reduction was to help businesses, not to help people booking

Some companies are passing the deals on and that's great for them to be able to do that

Others need the money to stay afloat

I've done the maths based on the figures and the hotel has upped their price by £179. What with the reduced occupancy, coupled with the increased cleaning costs because of Covid, that sounds fair enough. The alternative could be them going under and everyone loses. The bonus to the guest though is despite this increase in price, the guest is still saving £100. I don't see what the complaint is because in reality, they've passed part of that reduction due to VAT onto you anyway, money that would have been handed straight over to the government. If I was prepared to pay £2300 in the first place, I would be happy to get the reduction of £100 at all.

The loser in all of this is the treasury as their tax receipts will go down so all of the other taxpayers will be picking up the tab for this with increased borrowing, funding cuts, other potential tax increases etc etc.

yes I agree.
Actually it does benefit businesses AND consumers as it avoids businesses having to put up their prices (or it means they can out them up less, benefitting the consumer)

the loser is the exchequer/ tax payer - so all of us

but the gain is saving jobs and all the benefits that brings to society and so I am in support of the VAT rate cut