AGENTS are warning that would-be travellers should not be deterred by the jump in VAT to 20%.
Two operators – Thomson and First Choice, both part of TUI Travel – say that holiday prices will be largely unaffected.
Thomson spokeswoman Louise Evans says: “To avoid any confusion, both brands are launching separate integrated marketing campaigns with retail, online and email outlets. The campaign will communicate that the VAT increase won’t affect Thomson and First Choice holiday prices.”
The hotel booking website Octopus.co.uk – listing more than 90,000 hotels in 180 countries – also stresses that the VAT rise should make few waves.
It also promises an extra 50% off at any TripAdvisor-rated hotels on bookings by January 26.
Octopus currently offers five-star hotel rooms in Dubai at half price – from £186 per night – with the four-star Morgans Hotel in New York from £130, reduced by the same margin.
Trade journal Travel Trade Gazette (TTG) points out that the VAT increase is passed on to package holidays via the Tour Operators Margin Scheme – although operators have to pay more VAT on profits, the rise is likely to add only about 0.5% to package prices if operators pass this on to consumers.
But David Bennett, travel partner at accountants Saffery Champness, has pointed out that some domestic hotels might pass on the full impact of the VAT increase – ensuring the tax hike has more effect at home than abroad.