• Alex Subrizi

Rate hikes

Updated: Sep 17

No, this post is not about central banks, although the high inflation and rising interest rates that have been in the news are certainly amongst the reasons the rates for our lodgings are sharply higher for 2023. Yes, everything, from power to poolside furniture is more expensive than it was 12 months ago, and the increases seem likely to persist. But there are other factors driving Poggiosole's new rates. For the benefit of guests that know us from past years and may be suffering from sticker shock, here are three:

1) Raising the bar: Since our "post-covid" renovation in early 2021, our standards of comfort, equipment, cleanliness and care for guests have moved up significantly. Beyond the numerous refinements listed on the website, this year we've added a new saltwater chlorinator, new poolside furniture and parasols, 15 exterior lighting fixtures, a property-wide nebulising system to beat back mosquitos, new all-electric gardening equipment, and, coming soon, a motorised front gate and security cameras. Our larger lodging Le Rose added a bathroom at the start of this year. Further additions, like a new liner, LED lighting and low-profile skimmers for our swimming pool and play structures for our youngest guests, are planned for 2023 and 2024. CAPEX on this scale is amortised over twenty years or more, but the impact on our rates is there.

2) Taxes: No good deed goes unpunished, especially in a country where tax evasion is a national pastime. As our revenues have grown, we're set to exceed, this October, the threshold above which we need to start charging our guests VAT (for hotels and vacation rentals, the current rate is 10%). Crossing that line this year will mean collecting VAT throughout 2023 and beyond. Given that inflation is pushing our year-on-year costs up by at least 9%, an additional 10% for VAT means about half our rate increase won't even find its way to the defraying the CAPEX of raising the bar (above).

3) Water: This summer, for the first time since 2003, we paid for multiple water deliveries to our underground cisterns. The water in our cisterns is normally sourced from one of two wells, and used nightly to irrigate and fortnightly to top up our pool, which, in warmer months, evaporates around 150 liters a day into the air. The hotter and dryer the summer, the less water our wells provide and the more we need to irrigate and top up the pool. Heading into 2022 we hadn't budgeted for the cost of water deliveries, and it isn't clear to what degree we'll need to hire water trucks in 2023 and beyond. But with extreme weather becoming more common, and regulations forbidding the use of municipal water to irrigate and fill pools in the dry season, we can't assume that a summer of water trucks will be a 20-year event going forward.

Bottom line: Poggiosole is getting pricier, and consequently more exclusive. I have mixed feelings about this. There's the concern that legacy clients, whose visits we especially look forward to, will stop coming. There's the prospect of becoming a "luxury resort" (hint: Plum Guide has expressed interest in us) and the perfectionism that brings. There's the possibility that young families, in particular, will look elsewhere, leaving only DINKs and the comfortably retired. Historically, other than our particular appeal to German, Dutch, and Belgian guests, we've gotten a pretty broad cross-section of folks, and have liked it that way. But, if quality is to remain our priority, if taxes are to be paid, and inflation is what it is, we have little choice but to keep calm and see how it all plays out in 2023.

46 views0 comments

Recent Posts

See All