GST sting on hotel bookings

The Budget has ruled that overseas websites like Expedia will need to pay GST.

And that will make booking hotels more expensive.

From July 1 2019, websites such as Booking.com, Trivago and Wotif will have to pay 10 per cent GST on all sales of hotel accommodation in Australia.

It’s a big change because offshore hotel booking sites have been exempted from paying GST on sales since 2005. But that was when the market was small and offshore sales of Australian hotel rooms were made mostly by foreigners.

And experts say the costs will be passed on to consumers.

According to Nathan Cloutman, a senior travel industry analyst with IBIS World, overseas companies "will most likely increase [hotel] prices".

That said, it may not necessarily be the full 10 per cent.

"There is a culture of cheap hotels in Australia," Mr Cloutman told the ABC.

He said the tourism industry is so competitive that it could "limit the amount prices will go up" by offshore companies.

At the same time, he said big foreign powers are using their negotiating power to make deals with airlines and hotels.

"They do have power in the industry," he told the ABC.

Leading hotel industry group, the Accommodation Association of Australia, said it was about time overseas companies pay their way.

"We welcome the first step the Turnbull Government has taken to force offshore online travel agencies to pay their fair share of tax in Australia," the organisation's CEO Richard Munro told the ABC.

"The dominant online travel agencies command almost 85 per cent of online accommodation bookings in Australia, yet they employ very few people in Australia and pay virtually no tax in Australia."

Expedia was not making any comment at all

"Expedia Group abides by and respects applicable tax laws in the countries in which we conduct business,” an Expedia spokeswoman told the ABC. “We will refrain from commenting further at this time."

Leon Getler 11th May 2018.