This will be the future of the hotel industry in Colombia

Alejandro Morales, CEO of the Germán Morales Hoteles chain, calls for the regulation of informal markets that generate unfair competition in the sector and warns about the impact of the end of relief from the VAT exception. He referred to the recovery of the sector

The hotel industry has recovered from the impact that the pandemic represented for economic activity, but there are some demand factors that have not allowed it to fully reach the 2019 ranges, which is the minimum that hotels need, said Alejandro Morales, CEO of the German Morales Hotels (GMH) chain.  

The executive highlights that the sector is reporting better occupancy results than expected in the recovery process, and a rate improvement process taking the same period of 2019 as a reference.  

According to the president of the Germán Morales Hoteles chain, there are cases where the recovery is better than expected. “Santa Marta and Medellín show a more accelerated reactivation. Bogotá has also recovered, but not at the same speed as other cities. It is because it is a city that serves the corporate market and foreign tourism, items that have not fully recovered their dynamics”, he indicates.  

In the case of GMH, with its bh, bs, be, and EK brands, post-closing expectations have been higher than expected. For the GMH chain, there has been an improvement in significant levels of occupancy and a gradual recovery of rates, similar to what is happening to the industry. “We have hotels where we have managed to exceed the industry average, both in occupancy and rent, fortunately. Thanks to the platforms and adapted to this new reality, we have increased reservations, sales and volumes. Our hotels are in Bogotá, Medellín, Barranquilla and Santa Marta”, indicated the executive.  

According to Alejandro Morales, household spending has driven growth, a fact that is shown by a greater number of national clients to hotels. He emphasizes that "it is quite certain that we will end 2022 with occupancy levels, compared to what we observed in 2018 and 2019. The leisure tourism market has considerably influenced these results."  

For Alejandro Morales, CEO of GMH, there is no war within the formal hotel sector, which is also obliged to collect VAT. "If the other hotel formats do not have to pay and are informal, we are facing unequal competition."  

He recalled that the VAT exemption is until December 31, 2022, "that reality is already close." And he was emphatic in highlighting the timeliness and effectiveness of the relief, undoubtedly acknowledging the effort of the previous government with which there was good communication, “which we are sure we can advance with the current government. President Petro's reference to supporting tourism has been very clear. We are very expectant of the materialization of those announcements, ”he said.  

"But without the benefit of the VAT exemption, hotel services will become 19% more expensive, significantly affecting national demand," warned Alejandro Morales, CEO of GMH.  

For the executive, in 2023 there is uncertainty because the level of current inflation and next year is worrying; the increase in costs and the minimum wage that the government decrees, air fares and the possibility that a low-cost airline will disappear. "And we cannot be deceived: the country is experiencing great internal uncertainty as a result of a change of government that we are still reading and that has yet to define many issues," said Alejandro Morales.   

He warned that options like Airbnb are in direct competition “and the growth has been monstrously large. In Bogotá, more than 50% of the units are being rented by Airbnb. Faced with increasingly demanding customers, the general trend of traditional hotel activity is to strengthen its service to stay in the market”.  

He asked the government "to be demanding and control the sale of this type of services and that they charge 19% VAT, the only way to have fair and not unfair competition."

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