German VAT rate rising to 19 per cent on January 1

Travelling around Germany will become more expensive on January 1. On that date the country’s rate of Value Added Tax (VAT) rises from 16 to 19 percent. The increase is expected to raise £13 billion for the government and it’s designed to reduce Germany’s budget deficit.

But for business people it will increase the cost of booking a domestic flight, taking a train, hiring a car or staying and dining in a hotel.

So how will it affect you?

Trains and Planes:

Unlike the UK (where no VAT is levied on travel tickets) airline and train tickets for use within Germany are currently liable for 16 per cent VAT whether or not they are bought in that country.

So travellers taking the train will pay the extra price from January 1 even if purchasing the tickets before the end of this year. Deutsche Bahn (German Rail) says it will pass on the cost of the extra VAT along with a further increase to cover the rising costs of fuel. As a result train fares will cost 5.6 per cent more.

Domestic air fares will also rise. Lufthansa says it is passing on the extra 3 per cent VAT for all domestic tickets for flights on and from January 1. The increase covers purely domestic flights such as, say, Cologne-Berlin or Munich-Frankfurt, bought in or outside Germany. There’s better news for travellers booking international tickets. These aren’t liable for VAT and neither is VAT levied on domestic flights if tagged onto an international service even when a stopover is made. For example, a passenger who might fly New York to Frankfurt then transfer to Leipzig. Or someone flying from Manchester to Munich where he or she might break the trip for a couple of days before continuing to Berlin.

Budget carriers like German Wings must also pay the extra VAT. But the increase won’t be noticeable because tiered pricing and yield management systems allow them to disguise the extra tax.

Car rental

It looks as though the car rental firms are passing the extra 3 per cent directly to their customers. When Business Traveller checked the cost of renting a Mercedes C class from central Berlin this week, a one day rental with Hertz cost Euros 94.97 (including taxes and so on). When we checked the rate for same vehicle rented for a day on January 9, Hertz quoted Euros 98.42.

Rival firm Sixt quoted Business Traveller a rate of Euros 68 a day to rent a VW Golf at Cologne airport this week. The same rental on January 9 was quoted at Euros 69.76.

Hotels

It’s a confusing picture. Some hotels are openly adding the extra VAT to rates while others are including it as part of their annual rate review. Then again, some properties say they will leave rates unchanged in January (which is an off-peak time) but then load the extra tax onto their prices at busier times. The extra VAT will also apply to meals so hoteliers may increase their restaurant and bar prices.

When Business Traveller checked with the five star Vier Jahreszeiten Kempinski in Munich we were told by a spokesperson that “The hotel will not be raising its rates as a result of the rise in VAT. Our usual rate increase at the beginning of the year is 5 per cent and we will be sticking to this.”

But the situation at other properties can vary. For example, Berlin’s Adlon Kempinski says the higher VAT will lead to an increase in room and food and beverage rates.

Marriott indicated that the VAT rise might be passed back although not as a blunt 3 per cent rate rise. Says a spokesperson, “Generally our rates are always in line with the market. The VAT increase will certainly have impact although our rates are seasonally structured. Therefore there will be no increase in certain months.”

But France’s Accor group hotels are openly passing back the extra VAT along with, in some cases, their annual price hike. The budget Ibis hotel adjacent to Dusseldorf’s main station charges Euros 72 a night this week plus Euros 9 for breakfast. From January its rates rise to Euros 75 and Euros 9.50 respectively.

For a stay tonight, Munich’s four star Sofitel Bayernpost charges Euros 345 for rack rate, Euros 175 for a market price with breakfast charged at Euros 21. But come January 9, these rates rise to Euros 365, Euros 179 and Euros 22 respectively.

Or how about the Novotel in Berlin’s Mitte district? Tonight it’s charging Euros 149 full rate, Euros 79 market rate and Euros 15 for breakfast. But on January 9 you’ll pay Euros 169 and Euros 89 for the rooms but breakfast is unchanged at Euros 15.

For more information go to bahn.co.uk, lufthansa.com, hertz.de, sixt.com, kempinski.com, marriott.com, accor.com.

Report by Alex McWhirter

Transpacific debut for SIA’s new premium products

Passengers flying SIA between Singapore, Seoul and San Francisco will be the first transpacific travellers to experience the carrier’s widely praised new first and business classes (see Online news, October 19).

SIA says that its new B777-300ER aircraft (the only planes in the fleet which currently have the new first and business class seating) will begin operating SQ16 on January 16, returning the same day with SQ15.

Readers must note that the B777-300ERs will only operate these flights every Monday, Thursday and Saturday until March 10. On other days of the week, these flights are operated by earlier model B777s which have SIA’s “older” seating.

From March 11, the plan is then to switch the B777-ERs to SQ16 and SQ15 operating every Wednesday, Friday and Sunday. The earlier model B777s would then be used on the other days.

Flight SQ16 departs Singapore at 0910 arriving in San Francisco the same day at 1055 following an en route stop in Seoul. In the return direction, SQ15 leaves San Francisco at 1230 to reach Singapore via Seoul two days later at 0050. Note that the international date line means travellers gain a day on the way out but lose a day on the return.

SIA has traffic rights to carry passengers Singapore to Seoul, Seoul to San Francisco and vice versa in addition to Singapore to San Francisco. To avoid disappointment readers are always recommended to check the plane type in advance as carriers are known to make changes from time to time.

For more information go to singaporeair.com.

Report by Alex McWhirter

More budget flights for Vienna

Skyeurope is launching a number of low-cost flights from Vienna next March. Until now the Austrian capital hasn’t been well served by budget carriers. Existing services are limited to a number of routes operated by Niki/Air Berlin to Germany, the UK and Italy.

But the variety of destinations covered by budget services will rise significantly. Skyeurope intends to launch 16 new services. These include once daily flights to Amsterdam, Brussels, Bucharest and Paris Orly along with a six flights a week service to Sofia. Services to Athens, Barcelona and Venice Treviso will operate three times a week.

Interestingly the services to Sofia and Bucharest are among the first low-cost flights to be scheduled to Bulgaria and Romania which become new EU members on January 1 next.

Skyeurope is based in the Slovak capital of Bratislava some 40 miles from Vienna. Travellers from Slovakia and Austria use one another’s airports depending on where they are flying to. Skyeurope says it has decided to begin an operation in Vienna because of the growing number of Austrians using its routes from Bratislava. Says a spokesperson, “Some 20 per cent of our passengers departing from Bratislava are from Austria. For some routes, the figure can be as high as 50 per cent.”

For more information go to skyeurope.com.

Report by Alex McWhirter

Scottish expansion for Easyjet and Continental

Edinburgh’s links with the outside world will be boosted next year. Budget airline Easyjet will serve three new business destinations from Scotland’s capital city while Continental will double its flights on the New York route.

The first new Easyjet route, a daily service to Madrid, will start on February 25. It will be followed by a daily service to Munich on April 4 along with a daily service to Milan Malpensa starting on May 21. Return fares start at £56 for Madrid and Milan along with £64 for Munich.

At present, Edinburgh has no direct services at all to Milan and Munich. There is a weekday service to Madrid with BA Connect but this makes an en route stop at Birmingham so the journey time is extended to four hours, 35 mins. Easyjet is launching the new services with route development funding from the Scottish executive.

In early May, US carrier Continental will begin twice daily flights to New York Newark. The new flights are CO109 westbound and CO108 eastbound.
CO109 departs at 1240 to arrive in New York at 1520. The inbound overnight flight departs New York at 2215 to reach Edinburgh at 1000.

Continental’s existing flights are C037 from Edinburgh at 0920, reaching New York at 1200 and CO36 from New York at 1955 landing in Edinburgh at 0750. Flights feed into Continental’s Newark hub with connection possibilities throughout the US hinterland.

For more information go to easyjet.com, continental.com.

Report by Alex McWhirter

Emirates set to add Venice and possibly Newcastle, to European network

Emirates’ European expansion plans have been blunted by the late delivery of the A380 super jumbo. But it will add Venice to its network next July and is rumoured to be starting a Newcastle service from September.

By rights Emirates ought to have been adding more cities than these two. After all, the idea was that the A380s would have taken over its most popular services. In turn that would have allowed the smaller B777s and Airbus A330s to develop other routes.

“Aircraft availability is our stumbling block [when it comes to European expansion],” Keith Longstaff, the carrier’s senior VP for commercial operations in Europe, admitted to Business Traveller. “Emirates isn’t expected to receive its first A380 until August 2008. Yet originally we’d planned to have 18 of these planes in service by then.”

The five times a week service from Venice to Dubai will get under way on July 1, increasing to daily from September 1. Flights will be operated by A330-200s fitted with 27 business and 251 economy class seats.

Venice currently has no long-haul air service. Travellers wishing to reach the outside world must take connecting flights to Milan Malpensa, Rome or other European hubs like Frankfurt, Paris and London.

Emirates will capitalise on these shortcomings. Its flights out of Venice will connect in Dubai for beyond destinations. Says HH Sheikh Ahmed bin Saeed Maktoum, the carrier’s chairman and chief executive, “Venice is a popular tourist destination and an important gateway in Northern Italy for commerce. Our new service will contribute to Italy’s many flourishing small to medium-sized businesses by providing increased access from Venice to other major cities around the globe via Dubai.”

Rumours also abound that Emirates will bring long-haul air service to the UK northeast late next summer. Industry insiders suggest the carrier will operate a daily two-class A330-200 service from Newcastle to Dubai starting on September 1.

As in the case of Venice, the service would also provide beyond connections. It would also be the first ever long-haul eastbound flight from Newcastle whose catchment area extends to the Scottish borders in the north and as far south as York.

At the time of writing, spokespeople for both Newcastle airport and Emirates would neither confirm nor deny these rumours.

For more information go to emirates.com.

Report by Alex McWhirter

Turkish Airlines set for Star membership

If all goes according to plan, Turkish Airlines will become a member of the 16-strong Star Alliance in the next 16 months. The Istanbul-based carrier has been accepted for membership and now has to start integrating its systems with the others.

It means that members of any Star FFP (frequent flyer programme) will have another option for earning and redeeming mileage. For example, once Turkish becomes a member travellers from the UK will be able to earn points on non-stop flights to Istanbul whereas now they would have to take Austrian via Vienna or Lufthansa via Frankfurt. It also means that Star members will be able to offer easier connections at Istanbul for domestic cities within Turkey.

Turkish operates a 100-strong fleet comprised of narrow-bodied B737-800s and Airbus A320s which are used on short and medium-haul routes. On longer routes flights are operated with wide-bodied A330s and A340s.

The carrier operates with a two-class business and economy layout. It flies to destinations in Europe, the Middle East and the Gulf, Central Asia, the Far East and US.

For more information go to turkishairlines.com, staralliance.com.

Reported by Alex McWhirter

Kempinski arrives in Geneva

Luxury hotel company Kempinski will soon be represented in downtown Geneva. From December 1 the German hotel firm took over management of the Noga Hilton which opened 25 years ago.

The Noga Hilton is currently closed while it undergoes extensive renovation before re-opening as The Grand Kempinski Geneva.

Kempinski says it will be refurbishing all 230 rooms. A small batch will come on line in time for the Geneva Motor Show in early March with the remainder following by the end of May. The refurbishment programme also covers the Grill Restaurant, Brasserie, Lounge, Bar along with meeting and conference facilities.

The property has an excellent location. It’s just across from Lake Geneva and a few minutes walk from the commercial area and main train station from where there are frequent services to the airport, TGVs to Paris and Cisalpin “tilting” trains to Milan amongst others.

Kempinski has two other Swiss properties namely Le Mirador overlooking Lake Geneva but away from the city, and The Grand Hotel des Bains at St Moritz.

For more information go to kempinski.com.

Report by Alex McWhirter

Peninsula Hong Kong rolls out new fleet of Phantoms

Luxury brand Peninsula Hotels has purchased no less then 14 Rolls-Royce Phantom cars for use at its Hong Kong property. The new fleet is the largest ever single order of new Phantoms, and replaces the hotel’s previous collection of Rolls-Royce Silver Spurs.

The Peninsula Hong Kong has a history dating back over 35 years of providing Rollers for its guests, with its first purchase of seven Silver Shadows being made in 1970. Much has changed since those days, not least the purchase of the Roll-Royce name by German manufacturer BMW – the Phantom is still assembled in the UK though, and in the case of the Peninsula fleet certain modifications have been made through the manufacturer’s ‘Bespoke’ scheme. The boot has been enlarged to accommodate guests’ luggage, and rear air-conditioning controls have been added for passenger use, as well as a cool box for chilled hand towels.

Entertainment is supplied through the two 12 inch screens and 15-speaker sound system, and the fleet has been finished in a colour described as “Peninsula Green”.

The environmentally-conscious traveller might baulk at the near seven-litre engine which guzzles gas at a not-so-friendly average 18 mpg, although Rolls-Royce points out that technological advances means the fleet consumes significantly less fuel than the previous generation Silver Spur. The Phantom retails from around £250,000, putting conservative estimates on the hotel’s outlay at over £3 million.

Guests should note that unless purchasing certain package deals, a roundtrip airport transfer in a Phantom will cost around 1,500 HKD (just under £100). Room rates at the Peninsula Hong Kong start from 3,200 HKD (£210) for a superior room.

In other news, Peninsula Hotels is set to open its eighth property in 2007 – the Peninsula Tokyo. Located in the business district of Yurakucho, opposite the Imperial Palace, the 314-room hotel will feature guest rooms starting from 51sqm, with views of the city or Imperial Palace gardens. The hotel is due to open its doors in September 2007.

For more information visit peninsula.com.

Report by Mark Caswell

BA to introduce new checked baggage allowance after all

BA’s new checked baggage allowance policy is being reintroduced. First announced back in June, but postponed as a result of the new security measures brought in during the summer (see online news June 15, 22 and July 19), it is now promised from February 13.

As regular readers will remember, under the new rules the maximum weight of a piece of checked luggage is limited to 23kg. Any passenger arriving with a single piece of checked baggage weighing over the 23kg limit, will have to put the excess into a separate case, and if they have already reached their limit in terms of the number of checked bags allowed, will have to pay an additional surcharge for the extra bag depending on the length of travel.

Some changes are also being made to the number of checked bags a passenger can put in the hold free of charge – from February 13 domestic, Euro and World Traveller passengers will be allowed one piece of checked luggage, Club Europe and World Traveller Plus passengers two pieces, and Club World and First passengers three pieces – but note again that none of these bags can weigh over 23kgs – irrelevant of class travelled.

The new excess baggage charges range from a flat rate of £30 per bag for UK domestic flights, to £60 per bag for short-haul flights, and £120 for long-haul travel. A 20 per cent discount will be available to passengers pre-paying for excess baggage online at ba.com. But that entails the passenger knowing in advance that their bag will be overweight, which may not always be possible, particularly on the return leg of a business trip. And of course the charges above don’t include the possibility of having to buy a brand new bag in which to place your excess luggage in the first place.

BA says that it is introducing the new policy in preparation for its move to Heathrow’s T5 in 2008, and in order to comply with health and safety regulations. But the date it intends to implement the new restrictions is controversial in itself. February 13 falls around the time of the start of the first half term of 2007 for many schools, and less than two weeks after the increased APD rates are introduced – both of which will already be putting a strain on check-in staff.

For more information on the new baggage policy visit ba.com and click on the link on the homepage.

What do you think of BA’s decision to introduce the new checked baggage policy? Send us your comments by clicking on the link below.

Report by Mark Caswell

ME Brand for Melia

Spanish hotel group Sol Melia is celebrating its 50th anniversary with the launch of its new lifestyle brand.

ME by Melia aims to personalize the experience of staying in a hotel, with guest services being built around the marketing slogans: RememberME, ExperienceME, EnergiseME and ChallengeME.

An example of this is that rather than a concierge, the brand will have an “experience manager” to tailor the guests’ experience while staying and the ME brand will also be the first in the group to offer guest recognition services.

The first ME hotel opened in Madrid in October. The 192-room ME Madrid Reina Victoria offers wifi internet access, a CD/DVD home theatre system with 32-inch interactive plasma screen TV and an a in-room library of CDs and DVDs. Rooms also have an iPod adaptor and iPod with more than 900 songs to play.

Luis del Olmo, executive VP and chief marketing officer for Sol Melia says: “We want to deliver experiences. ME will be a bit like the W Hotels. A business hotel but with fun.”

For repeat customers there will be a loyalty programme called MaS. This will offer guests preferential reservations, express check-in, free daily newspaper, and late check-out until 4pm. MaS Gold Card holders will be able to check-in at 10am and receive a gift in their room.

In the last three years Sol Melia has spent £300 million on repositioning its brands, in key city locations and resorts. For more information on the other hotels in the group: Melia Hotels and Resorts, Tryp Hotels, Sol Hotels, Paradise Resorts, Sol Melia Vacation Club, see solmelia.com.

For more information on the ME Madrid property visit mebymelia.com.

Report by Felicity Cousins