It is rather ironic that the hoteliers have been forced to drop their prices, while the Balearic government has decided to double the rate of the tourist tax. Back in November at the World Travel Market in London I got the impression that hoteliers were not happy. They were angry over government plans to double the tax because they feared increased competition from Turkey and north African destinations. The line from the government was that all was rosy in Majorca's tourism garden, but the hoteliers were not optimistic. They had been informed by the British travel industry that Turkey was making offers that couldn't be refused. The alarm bells started ringing. That same week local hoteliers claimed that more than one million tourists could be lost because of the higher rate of the tourist tax.
But it is the government which has remained firm. It has decided to push ahead with plans to raise the tax, and hoteliers have had no option but to drop their prices. Some hoteliers fear there could be a price war with competing destinations, which is great news for tourists and the tour firms but bad news for the resorts. So, the government will raise extra cash and the hoteliers will see their profits fall. As the profits are already taxed anyway, it would have made more sense for the government to have abandoned its tourist tax plans.
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