Hoteliers insist on 9% Vat rate despite business boom

By Pádraig Hoare

Hoteliers have insisted the 9% Vat rate remains essential to the sector, despite room prices surpassing Celtic Tiger levels and the Exchequer missing out on an estimated €491m yearly from the tax incentive.

The Irish Hotels Federation (IHF) said the 9% Vat rate, which was lowered from 13.5% during the height of the recession to boost hospitality and tourism, was “vital in underpinning and sustaining the continued growth of the tourism sector”.

Irish Hotels Federation, Michael Lennon, said the 9% Vat rate has supported the creation of 60,000 extra tourism-related jobs’

IHF president Michael Lennon said the 9% Vat rate had “supported the creation of over 60,000 additional tourism-related jobs, an increase of 33%” since 2011, adding the current room rates in Dublin were comparable to other European cities.

“The 9% Vat has been shown to be the right rate for the sector — bringing Ireland more closely in line with tourism Vat rates in other competing European countries and enabling Irish tourism to become more competitive.

“This includes Dublin, where room rates are highly competitive compared to other European city destinations, and across the country where there is also great value to be had,” Mr Lennon said.

Calls for the 9% rate to be increased have grown as prices in Dublin surpassed 2006 levels, according to Crowe Horwath figures, while the Department of Finance has estimated €491m would be brought in if the 13.5% was restored.

Taoiseach Leo Varadkar in recent days indicated his support to retain the 9% rate, saying reversing the reduction “in one fell swoop” would be a mistake.

An IHF industry survey showed 70% of hotel and guesthouse owners saying business was up this summer compared to last year, with increases in so-called “staycations” and visitors from North America and continental Europe boosting numbers.

Six in 10 hoteliers say business levels from the US are up while four in 10 are seeing an increase from Germany, the survey showed.

There was also marked increases from French and Italian visitors, it said.

The IFH said that although the fall in UK visitors appears to have tapered off for now, the UK market continues to be a significant concern.

Mr Lennon said: “The substantial fall in visitor numbers during 2017 from the UK, our largest market with the greatest seasonal and regional spread of visitors, served as a reminder of how vulnerable our tourism industry is to volatility in other economies.”

Corporate meetings and events are a significant source of business for just under half of hoteliers, with similar numbers reporting an increase in business year-on-year.

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