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Associations say Federal budget is a ‘mixed bag’ for Australian hotels

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Australia’s two leading accommodation associations say the latest Federal budget has a range of positive and negative implications for hotels across the nation.

The Accommodation Association of Australia says while the Federal Government’s greater commitment to tourism in Asia is welcomed, as is the introduction of tax loss carrybacks, the deferral of company tax cuts will not assist business.

“Uncertainty within the accommodation industry is likely to increase as a result of the Budget,” said the Accommodation Association of Australia’s Chief Executive Officer, Richard Munro.

“With the introduction of the carbon tax now less than two months away, operators of accommodation businesses were looking forward to relief through company tax cuts – but these are off the agenda in the short-term.

“Our industry relies heavily on consumer confidence, so we are hoping that accommodation businesses will see some of the benefits of the household assistance package.

“The industry looks forward to Australians spending at least some of this money on taking a holiday within Australia,” he said.

Munro said the Association is concerned that airports are facing higher costs as a result of the budget.

“In our Pre-Budget submission, the Accommodation Association argued that the Passenger Movement Charge (PMC) should be recalibrated so that it provides a higher level of support for domestic tourism,” he said.

“This would have been far more preferable than a straight increase, as has been announced.

“With airports also having to foot the bill for the cost of police patrols at terminals, inevitably this extra impost is likely to be paid for by the travelling public.

“Increasing the cost of travel invariably results in less people staying in tourism accommodation.”

According to Tourism Accommodation Australia, the Government’s AUD$610 million raid of the tourism industry will be costly for the accommodation sector as the price of travel packages to Australia rises.

“This is a $610 million Government cash grab that will add significantly to the cost of trips to Australia and make us even less competitive on price with our competitor destinations”, said Tourism Accommodation Australia Managing Director Rodger Powell.

“There is yet another challenge to Australian competitiveness.  Travel packages that include substantial accommodation components are now even more expensive and less attractive than before.”

Powell rubbished the argument that the PMC increase is being used to fund additional tourism marketing in Asia.

“The creation of the Asian Marketing Fund is very welcome but it represents only ten per cent of the extra money the Government has ripped out of the tourism industry by increasing the Passenger Movement Charge.

“If the government was serious about assisting our industry and growing jobs it would give all the extra funds raised from the PMC to Tourism Australia.

“Tourism Australia has the confidence of the industry, but has been put in a tough situation of now being expected to do more with less.

“The extra $8 million from the Asia Marketing Fund in 2012-13 barely covers the impact on Tourism Australia’s budget of the four per cent cut from the Government’s efficiency dividend and the base-budget drop back to $130.2 million from last years $134.8 million.

“This raid of the tourism sector is an extremely short sighted decision. The only goal appears to be to satisfy a political imperative of a promising a surplus, rather than for any genuine economic reason and in the face of the Government’s previously stated intention to encourage new growth and investment in the tourism sector.

“Only last week we applauded Martin Ferguson’s announcement of the Tourism Investment Strategy to attract new offshore investment in accommodation. This week Wayne Swan told offshore investors that we don’t want them by doubling the tax on overseas Managed Investment Trusts and removing the Capital Gains Tax discount for overseas individuals.

“The scrapping of the Tax Breaks for Green Buildings program is also disappointing.  With the carbon tax commencing in July this year it is incredible that the Government is removing incentives to reduce carbon usage.

“If the Government is serious about its plans for tourism in the Asian Century it should begin by raising the cap on its tax loss carry-back provisions from $1 million to $5 million and make trusts eligible.  This would provide some encouragement for major investors to look at historically volatile sectors like accommodation.  The current cap, while being helpful for small businesses, is not going to change the investment landscape in the accommodation sector.

“The hotel sector is a major job creator. The government needs to assist the industry be more competitive and attract high spending overseas visitors – not drive visitors to our many well-funded competitors overseas.”

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