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Norway’s hotel industry braces for a tough winter

While many hotels in Norway saw the number of overnight stays return to pre-pandemic levels in 2022, the start of 2023 looks quite challenging - especially for the city hotels.

Published: 24 December 2022 13:22 CET

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Although many hotels in Norway experienced a return to pre-pandemic levels of overnight stays this year, the beginning of 2023 is expected to be difficult. Photo by Svein Sund / Unsplash

Bookings at major hotels for the first three months of next year are lower than at the same time last year, the newspaper Dagens Næringsliv reports.

“We expect challenging winter months after the New Year, especially for the hotels in Oslo and at Gardermoen,” hotel consultant Peter Wiederstrøm told the newspaper.

The most recent figures show that, at Gardermoen, there is lower room occupancy in the first three months of 2023 compared to this year.

“Also, bookings look weak for the hotels in Oslo, with slightly lower estimated room occupancy for both January and February,” Wiederstrøm pointed out, according to the news bureau NTB.

Torgeir Silseth, the head of the Nordic Choice hotel chain, says that 2022 will be the best year ever but is also worried about the first quarter of next year, especially in Eastern Norway.

“But the signals we get from the market are not dramatic. We are talking about a 5-10 percent decrease for Norway as a whole – and close to 10 percent in Oslo,” he said.

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Why a new tax proposal could hit Norway's travel industry hard

On Monday, Norway’s Tax Committee presented its ideas for a shakeup of Norway’s tax system.

Its report suggested a flat VAT rate on all goods and services, including transport, accommodation and tourism activities. The proposals have been met with a lukewarm reception from the tourism industry.

“It will dramatically change the competitive situation of Norwegian tourism. It will be more expensive in general in Norway, but we will also be at a significant disadvantage against our European competitors,” Ole Michael Bjørndal, director of business policy at the Norwegian Hospitality Association (NHO Reisliv), told Norwegian broadcaster TV 2.

The new flat rate of 25 percent would double the VAT on flight tickets, transportation and ski lifts. Bjørndal has said this would lead to more people holidaying in Sweden as the VAT on tourism-related activities there is six percent.

“If it (VAT) increases to 25 per cent, it will be considerably more affordable to holiday in Sweden than in Norway. It will worsen the situation of Norwegian hotels, which are already struggling to fill up the beds, especially in the low season. There is no room for a price increase, then there will be less demand,” Bjørndal said.

He added that the proposal went a fair distance to ensure that Norway becomes a less attractive destination.

The committee said that the flat VAT rate would pay for increased welfare in Norway. Currently, the proposals from the committee are just suggestions and have not been formally adopted by the Norwegian government.

While the proposals from the Tax Committee have yet to be adopted by the government, Norway has previously signalled its intent to tax tourists more.

A potential tourist tax could be included in the budget for 2024 as part of the agreement for the fiscal plan for 2023. These plans are separate from Tax Committee’s proposals.

While the government is in the early stages of formulating a tax on visitors, it could come in the form of extra tax levied on hotel stays, souvenirs and tourism activities.

Proposals to pass some of the maintenance and cleaning costs on to tourists have appeared several times in recent years, most recently in the political agreement on which the current government was formed in October last year.

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