Restaurants and tourist accommodation businesses call for reduced VAT rates on food and energy
The hospitality and catering sector, which has seen increases in raw material costs of up to 50% in recent weeks, anticipates that the last three months of the year will be “worrying”, according to a statement from the hotel, restaurant and catering association of Portugal AHRESP.
AHRESP reported the results of its most recent survey, “carried out during the second half of September and first half of October, both for restaurant and similar businesses, as well as tourist accommodation”, which concluded that “the consequences of inflation are increasingly worrying for the sustainability of businesses”.
Thus, according to AHRESP, “for 71% of restaurants and 83% of accommodation businesses, raw material costs have increased by up to 50%”, and “the shortage of essential products is also already being felt”, revealed “73% of restaurants and 26% of accommodation companies”.
The association also said that “in light of this increase in costs, updating prices was inevitable, with 83% of catering companies and 69% of accommodation companies increasing their prices”, noting that “in catering (51%) and accommodation (45%), the increase did not exceed 10%”.
According to the association, “a decrease in demand has already been felt”, with 54% of restaurants and 49% of accommodation businesses seeing a “drop in turnover of up to 20% in the month of September”.
The association recalled that “to mitigate the negative effects of this inflationary cycle, which could worsen, AHRESP has been proposing temporary measures, such as introducing reduced VAT (IVA) rates on food and beverage and on energy, gas and electricity tariffs”, highlighting that “results from the survey confirm the importance of these measures to the extent that, for restaurants (89%) the VAT measure (on food and beverage) is a priority, while for accommodation (81%) the reduction of VAT on energy is vital”.
According to the association, “the absence of preventative measures will lead to a new increase in prices, worker layoffs and closure of businesses”.
AHRESP said that “in the restaurant sector, 68% are considering increasing prices, 37% will lay-off workers and 13% will close down their businesses” and that, “in the case of tourist accommodation, 63% of businesses also said they will have to increase prices, 15% will go ahead with layoffs and 8% are considering closing down”.
“The outlook for the last quarter of the current year is very worrying,” said the association, with 45% of restaurant and 31% of accommodation companies considering that “this last quarter will be worse or much worse than the fourth quarter of 2019”.
AHRESP also warned that “in addition to the inflationary context, the rise in interest rates will certainly also cause a major impact on the disposable income of families, leading inevitably to reduced purchasing power.
The survey took place between September 22 and October 10, “obtaining a total of 473 responses from the catering and similar sectors, and tourist accommodation, throughout the country”, according to AHRESP.