Australian accommodation may cost more from next year as overseas travel agents pass on the pain of new tax laws.
Nathan Cloutman, a senior travel industry analyst with IBIS World, told the ABC that overseas booking agencies “will most likely increase prices” following the government’s budget announcement on Tuesday.
Booking websites like Booking.com, Trivago and Wotif will be expected to pay ten percent GST on all sales of hotel accommodation in Australia from July 1, 2019 to ensure fairness for local operators.
Mr Cloutman believes the agencies will seek to pass on some of the extra tax burden, making accommodation more expensive.
But he says they are unlikely to pass on the full ten percent because there is a “culture of cheap hotels in Australia”.
And he argues the competitive nature of the tourism industry could “limit the amount prices will go up” as offshore agencies compete with local booking sites like Webjet and Stayz, and rental models like Airbnb.
Airbnb will not be affected by the budget change because it falls under a different rental category for GST purposes, but it could be looked at more closely during the implementation of the policy.
The Australian Chamber – Tourism has welcomed the imposition of the new GST rules, saying it is pleased by the move to “tackle the inequity” between international and local booking providers.
The Accommodation Association of Australia has also welcomed the move, with CEO Richard Munro calling for the national competition watchdog to ensure any financial hit is not passed on to accommodation businesses.
“While this crackdown on online travel agencies is an excellent initiative, the last thing we want is for these foreign giants to ramp up their commissions even more, meaning Australian accommodation businesses simply end up paying online travel agencies even more,” he said.
“Therefore, we would like the Australian Competition and Consumer Commission to take immediate steps to ensure this doesn’t happen.”
The government argued on Tuesday that the GST exemption for overseas accommodation agents was originally introduced for offshore tour operators, not overseas websites.
“Both Australian and foreign consumers are increasingly booking Australian hotel rooms through online services based offshore, which are taking advantage of the exemption designed for offshore tour operators,” federal treasurer Scott Morrison said.
“Removing the exemption will level the playing field by ensuring the same tax treatment of Australian hotel accommodation, whether booked through a domestic or offshore company.”
A spokeswoman for Expedia Group told the ABC: “Expedia Group abides by and respects applicable tax laws in the countries in which we conduct business.”
The budget proposal must be supported by all states and territories for it to come into effect next year.