Some hotels operating near Volcanoes National Park and those close to the border with the Democratic Republic of Congo are among the hardest hit by financial difficulties.
With the government implementing a 18% VAT on hotel and restaurant services, hotel owners argue that this tax comes at a time when their sector is already facing a decline in customers. They say hotels near the park and border areas have been particularly affected.
In Rwanda, the hotel and tourism industry has long been considered one of the pillars of the economy. However, investors in the sector now report serious challenges that are reducing profits.
They explain that the new VAT adds to their burden at a time when business has not yet recovered to pre-crisis levels.
“VAT comes at a time when the hotel sector is already declining. We are not against paying taxes, but when customers are already few, adding VAT makes it harder to compete. If we raise prices, we risk losing clients; if we don’t, profits keep shrinking,” said one investor.
Hotels Near Volcanoes National Park
Hotel owners in Musanze District say the decline in international tourists has hurt their businesses.
They note that many of their key clients used to come from the United States. Travel advisories issued by the U.S. government regarding areas near the DRC border have led some tourists to postpone or cancel trips, reducing customer numbers.
Tourism operators emphasize that when tourist numbers drop, the impact extends beyond hotels to restaurants, tour guides, and other service providers.
Hotels Near the DRC Border Also Affected
In border districts, investors report that customer traffic has decreased due to Ebola prevention measures.
They explain that Congolese citizens used to frequently cross into Rwanda for lodging, dining, or business. The reduction in cross-border movement has negatively affected their operations.
Calls for Dialogue with Government
Hotel owners say they are not asking for tax exemptions but rather for dialogue with the government to explore ways of supporting the sector during this difficult period.
They suggest temporary relief measures or tourism promotion initiatives to help attract more customers and sustain investment.
Government’s Position
Authorities state that the 18% VAT is intended to broaden the tax base and increase the country’s capacity to fund development projects.
Economic experts agree that taxes are essential for national growth but also highlight the importance of dialogue between government and private sector actors to find solutions that allow the hotel industry to continue contributing to Rwanda’s economy without being overwhelmed by market challenges.
Broader Impact
The ongoing debate over VAT has the attention of hotel operators, who hope that discussions between the government and private sector will lead to strategies that protect tourism and encourage investment.
Mwizerwa Ally
Rwandatribune.rw
