Tourism in Slovakia gets a boost

Contribution for recreation has increased the interest of Slovaks in spending a holiday in their home country.

Asotria Hotel in the Bardejov SpaAsotria Hotel in the Bardejov Spa(Source: TASR)

Slovakia, a country that boasts all kinds of tourist destinations except one – a sea – has still not fully harnessed its touristic potential. Not just a large portion of Slovaks travel abroad to find what already exists in Slovakia. Foreign tourists keep mistaking Slovakia for Slovenia or recognise Slovakia only because of the former common state with the neighbouring Czech Republic – Czechoslovakia.

To better tap the potential, the government has introduced an employer’s compulsory contribution for recreation as well as reduced value added tax on accommodation services. This is already bearing fruit, but hoteliers and other entrepreneurs in tourism perceive the measures as temporary patches over holes created by increased wage costs. It is also too early to assess the impact these two measures will have on tourism in Slovakia.

“We also assume that contributions for recreation are behind the increase in the number of domestic tourists, but a more precise evaluation could be carried only after one year,” Marek Harbuľák, general manager of the Association of Hotels and Restaurants AHRS told The Slovak Spectator.

During the first three months of 2019, the number of nights domestic visitors spent in accommodation facilities in Slovakia amounted to 2.3 million, what is a year-on-year increase by 9.2 percent, according to the Transport Ministry.

Nevertheless, hotels and other businesses in tourism report the increasing interest of visitors in spending a holiday in Slovakia.

Legislative changes

Last October, parliament passed legislation authored by Andrej Danko’s junior coalition party SNS. The legislation slashes VAT on accommodation services from 20 to 10 percent along with introducing recreational vouchers. Both measures are effective as of January 1, 2019, the first idea of vouchers dating back to 2009. The aim of the measures is to increase demand for accommodation services in Slovakia and thus propel the development of Slovak tourism further.

“The key benefit of recreational vouchers is to enable low-income citizens at least one holiday per year,” said Karolína Ducká, spokesperson of the Transport Ministry, which oversees the tourism sector. “Thanks to the 55-percent participation of the employer, voucher holders have the tendency to make use of related services during their holidays to a much greater extent, as if they covered the entire holiday themselves.”

The ministry also expects the vouchers to result in the higher occupation of accommodation facilities between main tourist seasons.

Another benefit is the change of Slovak consumer behaviour in terms of holidays spent in their home country.

“Almost half of Slovaks spending a holiday abroad have searched for destinations for which our country has preconditions,” said Ducká.

The voucher scheme was designed so as to maximise the benefits of tourism entrepreneurs cooperating with accommodation providers.

“The incorporation of tourist products and services like tickets into skanzens, wooden churches, castles, wine tastings and so on into holiday packages offered by accommodation facilities not only helps generate revenue for tourist service providers, but comprises a complex tourist product, the backbone of a successful tourist destination,” said Ducká.

Additionally, the vouchers increase employment in tourism, the collected VAT and paid income and corporate taxes, so also the state budget revenue.

Under the recreational voucher scheme, private or state employers with 49 or more employees are obliged to cover 55 percent of an employee’s holiday costs a year with costs capped at €500. This means that the employer will pay an employee up to €275 while employee covers the rest. This benefit is exempt of income and payroll taxes. Only employees who have worked for a company at least two years are entitled to this benefit. Companies and institutions with fewer employees can pay the contribution as well, but on a voluntary basis.

Employees can use the vouchers for accommodation in Slovakia, with a minimum of two spent nights. And then there is coverage of other services provided by recreational facilities either for themselves along with family members or people living in the same household. This includes a spa stay or a summer camp for the employee’s children.

Vouchers increase interest

Hotels, spas and other accommodation facilities have reported an increased interest by Slovaks in spending holidays in Slovakia, expect the biggest wave to arrive in summer.

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