Dear Friends of Eurofurence,
I'm sorry to announce that Eurofurence 16 will turn out a bit more expensive than we had originally planned for. Eurofurence 16 was originally planned to start at 210€ for the most common membership type, which is a normal membership including a stay in a regular double room. Compared to the 160€ that Eurofurence 15 hat cost, this was already quite a steep increase, but larger venues do cost more, and we thought that 50€ extra should still be manageable for most returning attendees. So, in July 2009, we signed the contract. And printed the flyers that went in to th EF15 conbook, including the prices.
What made the increase in prices necessary?
Four months after we signed the contract, in November 2009, the current German government parties CDU/CSU and FDP submitted a proposal for a new law, the so called "Wachstumsbeschleunigungsgesetz" ("Law for the improvement of economic growth"), which was controversially discussed, but finally passed by both the parliament and the federal council in December, and signed by the president to become effective as of January 1st, 2010.
It is still being controversially discussed if this law will generate anything beyond extending the countries debts, but that is another story. The part where Eurofurence comes in is a change in VAT tax law. Goods and services typically have a value added tax of 19% added to them in Germany. The new law reduces the VAT rate for hotel accomodation (and _only_ the accomodation part) to 7%.
Now you might ask yourself, great, shouldn't that mean a reduction of costs by 12%? Unfortunately not. Since the contract was signed with the 19% still in effect, the negotiated "gross" amount will not change for us. Okay, now you might ask yourself, if the amount stays the same, why the need to increase prices for EF16?
The problem is the tax refund. VAT tax applies to the net profit. Eurofurence usually does not make a profit, after the con our pockets are usually almost empty. That means, usually, the 19% VAT tax based on our income gets cancelled out to near zero by an equal 19% VAT tax refund based on our spendings. The catch is: Only hotels get the reduced 7% rate. This results in Eurofurence paying the full 19% rate, but the refund will only be 7%, because that's what the hotel declares on their invoice.
That leaves us with a hole in our pockets that is about 20 000 € deep, and since nobody expected anything as crazy as this to happen, our reserves for contingencies do not nearly cover such an amount, leaving us with only one choice: Raise prices.
Why raise the base fee, and not the room prices?
That has been mostly a strategic decision. So far, EF prices have always been a mixed calculation, in which we re-sold the hotel rooms for slightly more than we bought them. The overall revenue, resulting in the amount of money that we are able to spend on organising the convention, was added from the base fee, sponsor fees, and a little profit we made from re-selling the hotel rooms and the associated extras such as triple occupancy and the early/late options. That allowed for some nice balancing, especially favouring the lower room categories. Basically, by slightly over-charging for the extras, we made it possible to keep the "basic" categories cheap for everyone.
Today marks the departure from this strategy. Unlike Suhl, Madgdeburg has quite a share of cheap accomodation options, such as the youth hostel. We could have kept the current strategy, which would have meant keeping the base fee and raising room prices by 12%. However, a price change that punishes everyone who stays at the main hotel, and rewards everyone who seeks alternative accomodation, was NOT what we wanted.
So from now on we are no longer doing the co-financing. The hotel room charges are now almost precisely what the hotel charges us (except some simplifcations), and the convention itself is now 100% financed by the con fee, the sponsors, and (almost) nothing else.
There is another good reason to keep hotel charges more strictly separate from the con fee: There is still a slight chance, that the courts and/or the german tax office might retro-actively decide we might be able to apply the 7% ratio to the hotel charge portion, too. However, this is currently neither apparrent, nor can even the most vested law experts give any definitive answers about this, given the fact the law has been passed a mere 10 days ago ... and we need to make decisions NOW. But if there's even the slightest chance, we want to be prepared for it, so that they money that YOU had to pay extra can be used to the greater good of the community instead of going to waste, like it is now.
Author
Topic: New pricing, room categories, and explanation (Read 40793 times)