In the opinion of some commentators the 1 January 2014 increase in VAT on hotel accommodation may be damaging the French tourism sector. The French hotel VAT rate rose from 7% to 10% in 2014 as part of reorganization of all French VAT rates – the standard VAT rose from 19.6% to 20% Jan 2014. The hotel VAT rate in France has been just 5.5% in 2015.
A trade union representing hoteliers has suggested that the French VAT rise will cost some 30,000 jobs in the industry and supporting sectors. Hoteliers are being forced to either raise their prices, or face a squeeze in margins. The latter typically means a drop in wage settlements with workers. Most hotels have confirmed that they will try and push prices up in the first instance, passing on the VAT increase to the consumers.
