The Visa consulate wants proof of accommodation before you apply for visa application. Having a solid proof of accommodation helps the consulate determine 1 thing:
Do you have enough money to cover all your expenses abroad?
If you want to read the official statement, here it is
So, proof of accommodation is used by the consulate know if you can sustain yourself in Europe for the duration of your stay.
You need to also mention the same in your personal cover letter to help the consulate determine the purpose of stay.
“The Means of Subsistence for the intended stay shall be assessed in accordance with the duration and the purpose of the stay and by reference to average prices in the Member State(s) concerned for board and lodging in budget accommodation, multiplied by the number of days stayed, on the basis of the reference amounts set by the Member States in accordance with Article 34(1)(c) of the Schengen Borders Code. Proof of sponsorship and/or private accommodation may also constitute evidence of sufficient means of subsistence.”
What this means is after you have submitted the proof of accommodation it is easier for the consulate to determine if you have enough money to sustain the duration of the trip.
The amount needed for you to get a visa varies among the Schengen countries that you are planning to travel (with the help of Flight Itinerary) but on average, you need to have at least EUR 100 per day of stay in Europe, after you have paid for your hotel and flight Itineraries.
Which means if you are planning a 20 days trip to Schengen countries. You need to have at least EUR 2000 in your bank.
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