VAT increase, fuel costs, and utilities put pressure on hotel industry

The domestic hotel industry in Ghana is facing an uncertain future as a result of hikes in utility tariffs and value added tax (VAT), as well as other operational costs.

The Ghana Hotels Association has expressed concern about the effects on the industry’s bottom line, with electricity tariffs having risen 56.5% over the last six months, and water tariffs up 48%.

The President of the Ghana Hotels Association, Dr. Edward Ackah-Nyamike, told the B&FT that many hotels are not even making a profit in the current economic climate, and that the industry is now in a “game of survival.”

He also warned of a possible significant jump in hotel prices due to the increases in other variables, which could potentially damage occupancy rates and impact the hospitality sector’s contribution to national revenue.

The latest hikes in utilities and VAT have also been criticized by the Association of Ghana Industries, with its CEO, Seth Twum-Akwaboah, stating that the level of utility tariff increments is “too high for industry to bear, particularly at this time.”

He added that while utility companies need to recover their costs, the effect of end-user tariffs reaching unbearable levels could be dire for both industry and the utilities.

As the domestic hotel industry continues to struggle with rising costs, it remains to be seen how it will be able to weather the current economic climate and maintain its viability.

Source: norvanreports.com