2016 Greece holidays likely to be cheaper, despite VAT increases

Package prices to Greece will remain the same – or could even drop – next year, despite the introduction of new VAT rates to some islands.

There have been fears the cost of hotel and villa accommodation could rise on popular tourist islands that are losing their VAT rate subsidies as part of Greece’s bailout package.

Mykonos, Naxos, Paros, Rhodes, Santorini and Skiathos are the first affected, seeing their VAT rates move to the national level of 6%, 13% and 23% this week. The current subsidised rates are 5%, 9% and 16%. Other islands will follow in June 2016 and 2017.

However, Sunvil Holidays and ABTA chairman Noel Josephides said: "Those islands are so popular that even if they put their prices up it will make no difference at all. They are full and overflowing."

Josephides added VAT rises will have little or no impact on prices because operators have already agreed 2016 rates and many hoteliers are absorbing any increase.

In addition, cheaper fuel prices and a weaker euro mean flights and packages will be lower and over capacity could lead to price drops.

Josephides said: "When booking packages, prices will be much the same or a bit lower. I would be surprised if there were increases of more than 1-2% over this year’s prices.

"Everyone is saying Greece is going to have a fantastic year.

"This will mean every man and his dog will want to fly to Greece next year because everyone believes Greece will be extremely popular. That’s a recipe for high volumes of discounting because there will be overcapacity."