IHF: Vat rate ‘to create more jobs’

Maintenance of the 9% Vat rate for those operating in the hospitality and tourism sectors will be one of the chief drivers of job growth in the coming year, according to the majority of respondents to a survey.

The latest quarterly hotels barometer, published this morning by the Irish Hotels Federation (IHF), paints a broadly positive picture for the industry, with 89% of hotel and guesthouse proprietors reporting an upturn in business conditions this year.

The survey found 64% of hoteliers plan to hire additional staff in the next 12 months, while over 80% plan to increase their marketing investment levels. As much as 95% of operators claim that the ability to boost their staff numbers is largely down to the 9% Vat rate on the sector.

“Irish tourism has performed strongly since the start of the year and throughout the summer season, with overseas visitors set to reach over 7.8m by year-end, a level not seen since 2007, ,” said IHF president Stephen McNally.

“The improved outlook for future trading conditions is providing a significant boost to tourism businesses throughout the country, including hotels and guesthouses.”

Mr McNally, who is also deputy chief executive of the Dalata Hotel Group, which is planning a significant expansion of its portfolio, said the maintenance of the Vat rate cannot be overstated.

“[The rate] is helping to level the playing field for Ireland when competing with other international destinations,” he said.

“Combined with increased air access and the reduction of the air travel tax to zero, this measure is delivering impressive growth across the sector.”

The IHF report also shows 95% of hoteliers plan to spend on product development and refurbishment work in the coming year. While still relatively low, capital expenditure moves by rural operations are now showing sustained growth.

However, major challenges remain.

High energy and utility costs, labour costs, local authority rates, and the servicing of debt still weigh heavily on many hotels and 34% say they remain concerned about the viability of their business.

Mr McNally said, however, that the percentage has fallen in the last year and, if economic growth continues, most of those in trouble should survive.

He said that while the number of registered hotels has fallen from 915 to 805 in the past six years or so, we have reached the bottom of the closure cycle.

Of key significance is the fact that the backbone of hotel usage, the domestic tourist sector, has seen a 77% year-on-year increase so far in 2015.