ALFA TRAVEL

Chancellor's Pre-Budget Statement and Change in VAT Rate

Some of our clients have asked whether the reduction in the standard rate of VAT announced in the Pre-Budget Statement on 24 November 2008 will result in a reduction in holiday prices for 2008 or 2009. The short answer is that it will have no effect on our holiday prices in either 2008 or 2009.

VAT rules as they apply to tour operators are very complex and there is no simple way to translate a reduction in the standard rate of VAT into an effect on the holiday price.

Alfa's policy has always been that the price shown in our brochures is the price you pay irrespective of the prevailing market conditions. In 2008, we absorbed all of the increases in fuel, food and foreign currency costs without levying any surcharges. We were one of the few coach holiday operators to do so. In 2009, we will continue with our policy of honouring the brochure price regardless of movements in other costs.

We calculate that, over the course of 2008 and 2009, the impact of the reduction in the rate of VAT will amount to significantly less than the increases in the cost of energy and fuel for our coaches and hotels which we have already absorbed. Accordingly we shall not be changing our prices as a result of either the depreciation in the value of the pound or the reduction in United Kingdom VAT.

Our prices remain highly competitive and we will continue to provide high quality coach holidays at the best possible prices.