Tourism receipts this year are set to suffer a drop of 5 percent, or over 500 million euros, even if value-added tax (VAT) remains unchanged on hotel services, due to the reduced competitiveness of the local tourism product, hoteliers suggest. Andreas Andreadis, the president of the Panhellenic Hoteliers Federation, said the year ahead appears grim for hotels, noting that other destinations are seeing governments reduce or keep VAT low on hotel services in order to bolster tourism demand. A different handling of the VAT matter could prove destructive for the sector, said Andreadis. The study to which he referred suggested that through 2013, tourism receipts are expected to drop by a total of 1.3 billion euros, while tax revenues from tourism companies will gradually shrink from 1.27 billion euros this year to 1.16 billion euros in 2013. While VAT in Greece on accommodation and food stands at 9 percent and on all other services at 19 percent, with an average VAT rate of 11 percent for hotels, rival destinations have VAT rates of around 5 and 8 percent. As a result, Greece is more expensive by 3 to 6 percentage points for hotel services, which is particularly important in such an inflexible sector in terms of prices. The VAT rate in Turkey on hotels is 8 percent; in the Netherlands it stands at 6 percent; Spain’s is at 7 percent but there is a proposal for a drop to 4 percent; in France it stands at 5.5 percent; and in Cyprus it amounts to 5 percent. Malta’s is at 5 percent and Germany’s at 7 percent.