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TOURISM

‘Global Dream’ turns into nightmare for German port town

The unfinished "Global Dream" rests quietly in a dock as the Covid-19 pandemic has turned the cruise ship into a nightmare for the shipyard in Wismar along Germany's windswept Baltic coast.

Dream Cruises
Global Dream ship on Germany's Baltic coast. Photo: Gregor Fischer / AFP

Destined to have become one of the world’s largest liners, the “Global Dream” will be lucky to ever set sail after the Asian-owned MV Werften shipyard filed for bankruptcy last month.

With no buyer having stepped forward, thousands of jobs at the shipyard are at risk and the local economy stands to take a huge hit.

“We are the classic victims of coronavirus,” said Carsten Haake, MV Werften’s chief executive.

The bankruptcy filing meant that construction work on the vessel, which would have become one of the first ships capable of hosting up to 10,000 passengers and crew, was halted.

MV Werften’s fate was decided thousands of kilometres away in Asia, in the offices of Genting HK, the owner of the shipyard and the Dream Cruises operator.

Specialised in tourism and casinos, the company collapsed from the disruption to travel caused by the pandemic and the decision made by its Malaysian parent company Genting to abandon it.

Without sufficient financial guarantees, the German state, which had agreed to support the shipyard, withdrew.

Since then, the 342-metre-long cruise ship – a little taller than the Eiffel Tower and adorned with a lurid cartoon fresco of astronauts and mermaids – has been waiting for a saviour.

The project with an estimated cost of €1.5 billion, is “75 percent” complete, according to the shipyard’s management. But it requires €600 million to keep going.

While the ship waits, uncertainty grips the 2,000 employees at MV Werften’s docks in Stralsund, Rostock and Wismar, across the coast of Mecklenburg-West Pomerania in what used to be East Germany.

Countdown

Christoph Morgen was appointed to be the legal administrator for the company with one goal: “find a buyer for the Global Dream”.

The ship was conceived when the cruise business was booming but demand for ocean-borne holidays has been hurt by the pandemic.

Even if “some investors have expressed an interest”, Morgen said, securing a good offer for such a giant ship is difficult, not least while the coronavirus is still around.

Administrators are on the clock for March 1st, their deadline for finding a
viable solution.

The situation is also being monitored closely by local government figures for whom the collapse was a “shock, as it was for the whole city”, the Social Democrat mayor of Wismar Thomas Beyer told AFP.

“Many families depend on the facility, generations have worked there,” he added.

The shipyards are closely linked to the history of the city. Built after the Second World War, they were first used to service Soviet ships, before branching out in the 1950s.

The fall of the Berlin Wall and the collapse of East German industry led to massive layoffs.

Privatised in the 1990s, the shipyards have since then had a series of owners from both Germany and abroad, but had survived the economic ups and downs until now.

Wismar no more

On Wismar’s central square, hemmed by the colourful buildings typical of Hanseatic cities, Heike Reimann, 67, worried what impact the disappearance of the flagship industry might have on the town.

“Wismar, without its naval yard, it’s not Wismar,” said Reimann, whose husband, Siegfried, worked for 10 years in the docks.

If no buyer comes forward, the yards will have to be converted to offshore wind or hydrogen production sites, symbols of the country’s energy transition, the administrator Morgen said.

The idea appeals to some residents.

“Is it really a good idea to still be building big boats what with global warming?” said Christian Buenger, 63.

But the pivot to green energy would be a disaster for local workers, unions said.

“For a different project, different employees with different skills will be needed,” said Henning Groskreutz from the IG Metall union.

The mayor’s office is equally cold on the idea.

“We have to keep our maritime industries, it is a part of who we are,” said mayor Beyer.

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TOURISM

Why more German cities could start charging ‘tourist tax’

German cities and districts are allowed to charge guests an 'overnight tax', according to a ruling by the country's highest court.

Why more German cities could start charging 'tourist tax'

The local taxes – called Bettensteuern or bed taxes – are compatible with the Basic Law (Grundgesetz), the Federal Constitutional Court ruled on Tuesday. 

It came following complaints about collecting the tax by a handful of hotel owners in Hamburg, Bremen, and Freiburg.

They complained to the highest court in Germany – the Federal Constitutional Court – that their basic rights were violated because they had to collect the tax from their own guests on behalf of the city or district authorities. And, because the tax can only be collected from leisure travellers – and not those on business trips – the hotel operators said this involved too much admin work. 

READ ALSO: German hotels can advertise cheaper prices than Booking.com, court rules

However, the court rejected the complaints. They said the hotels were not disproportionately burdened by the requirement, and that it is a reasonable obligation. 

Taxes on guests staying in overnight accommodation are also levied in around 30 other cities or districts across Germany, including Dortmund, Dresden, and Bonn.

Berlin, for instance, brought in ‘hotel occupancy tax’ in 2014. The name of the tax changes depending on the city. Cultural and tourism tax, as well as lodging, overnight, or city tax are common. 

What exactly is the tax?

The ‘bed tax’ has been in place in Germany since 2005.

It’s nicknamed that because visitors usually have to pay a certain percentage of the overnight price of accommodation per guest per night. This is normally around five percent, and it’s added automatically onto the bill. 

However, in some places a fixed amount has to be paid, like €3 per guest per night. But it can vary – in Hamburg, for example, the amount is staggered according to the price of the overnight stay. Simply, guests staying in more expensive accommodation pay more tax.

READ ALSO: How to save money on your taxes in Germany

Why was it brought in?

Hotels in Germany were relieved of paying some value added tax (VAT) several years ago. At the beginning of 2010, the tax rate dropped from 19 to 7 percent on hotels and overnight stays. So cash-strapped municipalities reacted by bringing in the overnight or ‘bed taxes’ taxes.

Due to a ruling from the Federal Administrative Court in 2012, “professionally compulsory” overnight stays are exempt from the tax everywhere. It meant that the rule only affected tourists. 

What else did the ruling say?

The constitutional court judges said it is not practical for the states to collect the money directly from guests, so it should fall on the hotel operators to do it on their behalf.

They acknowledged that it means additional work for businesses, but said these are tasks which are part of being an entrepreneur – like having registration forms filled out or paying VAT.

What does this all mean?

It could mean that cities and districts that do not yet charge an overnight tax could think about introducing it now. 

It’s also interesting that the judges did not say anything about a distinction being made between business and private travellers. It could mean that all guests will have to pay the charge in the future – not just those travelling for leisure.

People travelling on business trips in Germany can claim the tax back if they are charged it. 

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