Should I configure taxes in my channels as well?
Yes! But remember that the tax settings on your channels must match with Little Hotelier to avoid any rate discrepancies, so you will need to also set up something similar in the channel extranet. However, the settings might be more or less flexible depending on the channel.
Should I use the “Other” extra to my reservations?
Using the “ Other ” option can be very handy to add an ad-hoc extra with a price defined on the spot, like a “bar tab” (which can be of a varying amount depending on how much a guest spent at the bar during their stay).
⚠️ When you separate the taxes on your extras and you have no tax with settings selected for All extras , then you should avoid using the “ Other ” option when adding extras to a reservation, since these extras will not be taxed in this case.
➕ If you cannot use the “ Other ” option but still need to create extras that might vary in price, one option is to create an extra with a very small price (for example, 1 or 0.5) and then apply the extra multiple times to match the needed amount.
How do I handle tax changes, temporary tax cuts, and seasonal taxes?
If your country, region, or city has changed the value of taxes paid for staying in a room, you should change the tax settings as soon as possible. If the taxes have changed temporarily or they always change periodically (seasonal tax), you will need to manually change the tax settings every time the taxes change.
⚠️ The taxes you set in the Little Hotelier front desk always need to be current.
💡 Remember that the tax settings on your channels must match with Little Hotelier to avoid any rate discrepancies. If you change the tax settings in Little Hotelier, you will need to also go to the extranet of every channel and change its tax settings.
If I change my tax settings, what will happen with new and existing reservations?
When you create a new tax and when you update or delete an existing one, new bookings will implement the new tax settings. Existing reservations, however, will not inherit the new tax settings.
How do I apply my new tax to an existing reservation?
Existing reservations would have the tax settings that were configured at the moment of the booking. If you have changed your tax settings after the creation of a reservation, you can still change the settings manually by following these steps:
On the Reservations page, search for your reservation.
Click on the reservation whose tax settings you would like to edit.
Untick and re-tick any of the tax tick boxes under the Booking summary ; you will see that the tax amounts displayed change.
Ensure that you click on Save to update the reservation.
💡 The system also updates the reservation taxes if you change any detail of the room stay, like the number of included guests, the room type booked, the stay dates, etc.
What should I keep in mind regarding tax changes?
You cannot set taxes in Little Hotelier for a time period in the future. This means that, even if you are aware of an upcoming change in tax rates, your tax settings will be tied to the guest's time of booking, and not their period of stay in the future.
➕ Let’s say that:
Your current local laws require you to charge a tax of 20%.
Suppose the government decides to change the tax to 5% starting January 1 next year:
If you leave the tax settings as they are, a guest who books now but wants to stay at your property after January 1 will still see a tax of 20% and not 5%.
If you change the tax settings now, even bookings for stays this year will show a tax of 5% instead of 20%.
Normally, countries require the taxes to be applied in accordance with the legislation active at the time of payment. This means that:
For reservations paid entirely at the time of booking (non-refundable room rates with automatic deposits, for example):
The current tax settings are the correct ones. Make sure to process the payment and create the invoice before the new property tax settings are applied.For reservations paid entirely at the time of check-in or check-out (any of your refundable room rates, for example):
The current tax settings are incorrect. However, you can refresh the reservation 's taxes and process the payment with the new tax, which will generate the right invoice.For reservations with a partial deposit paid at the time of booking and the rest paid at check-in or check-out:
The tax settings will be correct for the first payment (deposit). However, if you update the taxes to make the taxes correct for the second payment (at the time of check-in or check-out), bear in mind that the invoice will have taxes entirely reflective of the new tax.
💡 Unfortunately, it is not possible to reflect two different types of the same tax on a single invoice. You can show either the old tax settings or the new.
⚠️ It is advisable to avoid partial deposits if the location of your property has seasonal taxes or is expecting a tax change in the future.
Should I use room rates exclusive of taxes if my area has seasonal taxes or if I know that the taxes will change soon?
⚠️ It is not advisable to use tax-exclusive rates if your area has a seasonal tax or is expecting a tax change in the future. If you still wish to use tax- exclusive rates, we recommend only using non-refundable rates that are fully paid at the time of booking.
If you are using tax-exclusive rates, the prices in your booking engine and those sent to the channels will normally change depending on your tax; however, you cannot set your tax to be only applied on a certain time range, which causes complications.
Normally, countries require the taxes to be applied in accordance with the legislation active at the time of payment. Because of this, if you have rates exclusive of taxes in Little Hotelier and the tax settings are expected to change in the future, you should make sure to avoid having rates that have deposits paid partially at the time of booking with the remaining sum to be paid at check-in or check-out.
💡It is especially advised to only use non-refundable rates that are fully paid at the time of booking.
Scenario A : Room rates that are paid at the time of booking don't require any price adjustment depending on the stay dates.
Here is an example of what happens with tax-exclusive rates fully paid at booking:
You sell a room using a non-refundable rate at a price of 100, exclusive of tax on all days of your calendar.
The tax this year is 5% and next year it will be changed to 20%
The room appears sold as 105 for all days, including next year, because 5% is your current tax setting.
If a guest books a room for next year at a cost of 105 and pays this year, that will be the correct cost and tax for the room.
Once you change your tax next year to 20% the room will appear sold as 120 for all days, which will cause all bookings to have the correct price again.
Scenario B : Room rates that are paid at the time of check-in or check-out need to be adjusted so that the cost considers the tax for that stay period. If your taxes change in the future, you will need to manually adjust the rates for the time period that will have the new tax. For this, you can use any tool that lets you adjust prices, such as changing the price directly on the inventory.
Here is an example of how to handle tax-exclusive rates fully paid at check-out:
You sell a room using a refundable rate at a price of 100, exclusive of tax on all days of your calendar.
The tax this year is 5% and next year it will be changed to 20%
The room appears sold at a price of 105 for all days, comprising next year, because 5% is your current tax setting.
To make the room appear as 120 for next year, you will need to adjust next year’s price to 114.29, so that the price sent to the channel and your direct booking engine for that time period is 114.29+5%=120.0045 (~120).
Next year you change the tax to 20%.
When the guest checks-in or checks-out and needs to pay for the reservation, if you simply refresh the taxes of the reservation it will say that the price is 114.29+20%=137.148 (~137.15).
You will need to apply a discount of 14.29$ to the reservation in order to have the right price (100) appear with the right tax amount (20) so that the payment and invoice are correct. 💡 Learn More: How do I discount a reservation?
As you can see, this is a complex process, which is why it is advised to avoid using tax-exclusive rates fully paid at check-in or check-out if your area has a seasonal tax or is expecting a tax change in the future.
What can I do if my area requires different taxes for different services provided?
In some countries, the tax is different between room stays and certain other services a property can provide, such as food, beverages (especially alcohol), spa treatments, etc. You would need to create different taxes for each type of tax needed with a little help from extras.
For example, if your country is taxing the sale of alcoholic beverages at 20%, but all other services comprising rooms are taxed at 5%, you would need to create both taxes. In order to do so, you can:
Create a Percentage tax of 5% for rooms and some extras
When creating the new tax, under Where should this tax be applied?, tick Rooms and Some extras.
Under Some extras , tick all the extras that are a service different from alcoholic beverages.
Save these settings.
Create a Percentage tax of 20% for alcoholic beverages
When creating the new tax, under Where should this tax be applied?, tick only Some extras.
Under Some extras tick all the extras that are alcoholic beverages.
Save these settings.
💡 Naturally, you would have to create the extras before adding the taxes for those extras. : Create and manage extras.
⚠️If you have extras that provide both alcoholic beverages and other services, you will need to separate these extras. For example, you cannot have an extra "Dinner with a bottle of champagne" if the dinner is taxed separately from the champagne. In that case, you would need to create an extra for Dinner and its respective tax and an extra for Champagne and a tax for it.
How can I change my taxes from one simple tax to different taxes for different services?
If your region used to have the same percentage tax on all services provided by your property, but is now changing the tax to be different for different services, make sure to remove the old taxes before creating the new ones.
What is a zero-rated percentage tax?
A zero-rated percentage tax refers to items (for example, rooms and extras) that are taxable, but currently, the tax rate on them is null or zero. It is more common in the countries that use a value-added tax (VAT).
➕ A zero-rated percentage tax is created and displayed just like all other percentage taxes on the Little Hotelier front desk and your direct booking engine.