Italy: Italian Hospitality to Invest in Technology to Receive Tax Benefits

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October 15, 2015
Tech Updates from Around the World
Danilo Molasch

Tax pressure is very high in Italy and Italian hoteliers consider the local government as “a 50 percent useless partner”; in other words, someone who cuts half of their profits but does not help to do business. The Mibact (Ministery of Cultural Activities, Goods and Services) recently introduced a procedure to allow hoteliers who invest in technology improvements to cut taxes: € 12.500 bonus for maximum €  41.600 of investments. While no one seems to be excited by this, the rate of the technology level in the hotels of the Bel Paese remains low if compared to other Western countries (see my article “In Technology We Trust” from Hospitality Upgrade, Fall 2013).

The Italian hospitality market still ranks No. 4 globally in terms of guestrooms offered, but the figures of occupation rate and average daily rate are under expectations. Milan’s EXPO 2015 brought attention and new business from abroad to Italian hoteliers, but has put them in front of a new scenario, populated by an increased number of new competitors – accommodation and bed and breakfasts in the local arena and emerging markets abroad with brand new hotels and elevated standards.The solution for this problem is not to pay lower taxes, but improve dramatically and quickly the rate of technology development and culture in hotel management and administration.

The list of investments included in the act of Mibact provides a better idea of the single technology issues Italy is facing. First, there is Wi-Fi. In many hotels, Wi-Fi is based on a self-managed solution built on networks designed by electricians who are not specialized and using landlines that are not correctly configured. The idea of the authorities is to push the hoteliers to invest and give free Wi-Fi, but this is not the real solution. Italians don’t need “free Wi-Fi,” but good Wi-Fi that can be given free to guests for general purpose and higher quality can be paid for in the case of demand.

Software applications used in hotels are good and in many cases locally developed. The issue is that hotel business in the Internet era asks for a huge increase of software requirements that independent and smaller hotels cannot afford. This is not a question of economics; older owners still manage hotels and their consultants have produced their best results in another age when everything was different, and without the fresh support of younger pupils that have studied in the best business schools and younger consultants with Internet technology and business models.

More balanced politics of hotel management between the old and the new guard should give to independent and small hotels the capacity to deal with the big picture of Internet business and demand for technology. Many Italian hotel sites are not responsive and designed as online brochures, completely disconnected from the Internet chain of value creation and marketing promotion. This is not an economic, but a cultural problem; they are not willing to invest in websites and digital marketing tools because they do not understand how they work. For this reason, booking engines are not integrated with the PMS or with the portals of public and private promotional sites; consequently, when hoteliers invest money in digital advertising they are frustrated by poor results and do not understand why.

What appears at the end of the investment list to get a fiscal bonus is what should come first: training and coaching on the use of developed technologies. This is the best way to fill the gap in digital culture and do the right things.

With a simple act of tax reduction, the Italian government can give local hoteliers a tool to ease the burden, but not the support to create and apply strategies to get out of the tunnel. Without the culture to understand the big picture, there is no way to integrate technology, development and progress into the hotel business.
 
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