The cabinet’s plans to increase value added tax (btw) on hotel rooms will put up prices 11% and cost the sector hundreds of millions of euros, the Financieele Dagblad reported on Monday.

The agreement between the four parties forming a new right-wing government includes a pledge to put up btw on hotel stays and other tourist accommodation from 9% to 21% in 2026.

The move will be a “major blow” for the sector, said Camille Oostwegel, owner of four hotels in Limburg. “Lots of hospitality companies are already closing,” he said. “Hotels are very price sensitive. We can’t just pass on the cost to customers.”

Marco Lemmers, chief executive of the Conscious Hotels group in Amsterdam said he feared international competition would not allow him to fully pass on the cost. And having less money to invest will reduce service standards and make it more difficult to pay off debts built up during the coronavirus period, he told the paper.

The government plans to use the proceeds of the increase to bolster its finances.

The sector has pinned its hopes on economic affairs minister Dirk Beljaarts who was previously chief of the hospitality sector lobby group KHN. The organisation is now campaigning against the increase.

Beljaarts, a minister on behalf of the far right PVV, told the FD that he could give the hotel sector little hope. “As a minister, I am keeping to the coalition agreement which includes the btw increase,” he said.

The situation is particularly concerning in Amsterdam where the tourist tax is going up from 7% plus €3 per person to 12.5% for each overnight stay.

“Luxury hotels in Amsterdam which charge €600 a night will soon have to include €75 a night in tourist tax, which is a bitter aftertaste for guests,” said Remco Groenhuijzen, director of the Mövenpick Hotel Amsterdam City.