SzRC - a Good Practice from Hungary Managing Seasonality in Tourism Success Stories Tirana, 20 October 2014 Mr Oliver FODOR Head of Section Tourism and Catering Department
Szechenyi Recreation Card (SzRC) 2
What is SzRC? Through the tax system the Hungarian state encourages the employers to give non-wage benefits as they can be provided to the employees under more favourable taxation conditions than salaries. A net wage of 100 forints costs now 196 forints to the employers, while a net fringe benefit of 100 forints costs only 135.7 forints. The fringe benefit system can provide additional resources to important social and economic policy objectives, as all benefits are earmarked. SzRC is a type of fringe benefit which can be used for purchasing tourism-related domestic services. 3
Legal basis of SzRC The legal basis of SzRC system is the Law on Personal Income Tax, which defines the basic conditions of SzRC s use (names and main fields of use of the three sub-accounts; maximum amount that can be transferred to each sub-account per year with favourable taxation) and the associated tax rules (employers have to pay 16% PIT and 14% health contribution after the 119% of the amount they give to their employees) Detailed rules for the issuance and use of SzRC are determined by a government decree. 4
Previous System (Holiday Voucher) and SzRC Paper based voucher Modern plastic card Only one issuer Liberalised market High commission (10-12%) Bureaucratic administrative processes Not well defined use Relatively low commission (1,5%) Less administration Targeted use Secondary market Transparent Unregulated market Detailed regulation (law and government decree) 5
One Plastic Card with Three Sub-Accounts Accommodation EUR 750 Catering EUR 500 Leisure EUR 250 6
Accommodation sub-account Catering sub-account Leisure sub-account All types of accommodation services Spa and thermal bath tickets + Domestic travel package Restaurants and canteens Cultural services: e.g. festival, concert, theatre, museum tickets Sport services: fitness center, swimming pool, ski resort ticket, rental of sports equipment Amusement park and zoo tickets Certain types of health care services etc. 7
The System of SzRC and It s Results Until 31 August 2014 EMPLOYER ISSUER Employers: 24 231 Employees: 1 013 272 Service providers: 40 903 EMPLOYEE cash voucher service SERVICE PROVIDER Amount transferred to SzRC Cards in 2014: 179 m EUR Amount spent from SzRC Cards in 2014: 173 m EUR 8
Amount transferred to and spent from SzRC since 2011 (million EUR) 600 500 400 300 200 100 0 Accomod ation Catering Leisure Total Remaining 28 50 19 97 Spent 113 355 70 538 9
Problems of seasonality Key challenges for European countries to expand the high season: Ensuring all-year visitation of tourist attractions Improving profitability and sustainability of tourism enterprises Balancing the number of permanent employees and seasonal workers Generating extra turnover for the suppliers of tourism industry Creating new seasons instead of expanding existing ones 10
SzRC s impacts on seasonality Amounts available are sufficient especially for several short break holidays during the year Remarkable increase in week-end family holidays in Hungary (2-4 days) Special off-season packages with discounts to attract returning guests to show another face of the tourism site new visitors with lower income who cannot afford holidays in the peak season Innovations in tourism products specialized for SzRC services, development of festivals, cultural events and culinary attractions also payable with SzRC: as a result such programs are available for every weekend now in Hungary 11
SzRC s impacts on seasonality Educating society to have short brake holidays to preserve their health, to make them invest in recreation, to go out for programs Off-season spa and swimming pool programs have become extremely popular since tickets can be paid with SzRC: Extra weekend holidays are generated Social targets such as improving the employees health is fulfilled Expiry of the remaining amounts to be spent from SzRC is 31 May: Pressure of spending the last sums before the high season was a conscious measure in the decree on SzRC AVAILABLE DATA SHOW: Cca. 60% of the total yearly spending appears in the off season 12
Thank you for your attention! 13