The newly introduced 18% VAT on all accommodation in Uganda, imposed by the Ugandan government on September 1, has resulted in some properties having to increase their rates to make up the loss, which will result in negative consequences further down the line. 

This is according to Roni Madhvani, director of Madhvani Group in Uganda, who said: “The implementation of the new accommodation VAT in Uganda unfortunately could not have come at a worse time for the sector. Tourism in Uganda and indeed East Africa has already been crippled by prevailing broader issues such as security and the threat of terrorism, Ebola - the current outbreak which is not even in the region, but in many source markets misunderstood - and the gay bill.”

Last week Sanctuary Retreats announced that following the implementation of VAT, it would be increasing its rates for Sanctuary Gorilla Forest Camp by 10%.

“The new VAT change was officially implemented on September 1 and the new rates already apply to all new bookings,” the announcement said. 

Roni said: “In this dire situation, with occupancies already in decline, accommodation providers in Uganda no longer have the ability to absorb any part of the resultant price increase due to VAT.” 

The increase is happening to a market that many already perceive to be relatively expensive compared to others on the continent and therefore the consequence will be negative for the sector when passed on down the channel to clients, he said.

Credit Caro Malherbe - http://www.travelbuyer.co.za