Decision not to bring back 9% Vat for hospitality 'devastating for the industry' Cork hotelier says

Michael O’Neill, of Fernhill House Hotel in Clonakilty, said closure of the famous Lennox's in Cork 'the tip of the iceberg' and things were going to get 'worse and worse'

Hotelier Michael O'Neill of Fernhill House Hotel in Clonakilty, Co Cork: 'We’re all gutted. Things were tough before and they are going to get tougher.'

The decision to not reintroduce the 9% Vat rate for the tourism and hospitality sector is “very short-sighted” and “devastating for the industry”, a Cork-based hotelier has said.

The temporary rate reduction came into effect in November 2020 in response to the covid pandemic. It was allowed to expire in September last year.

In the months leading up to the budget, numerous bodies representing the tourism and hospitality sectors have been lobbying hard for the 9% Vat rate to be brought back to help struggling businesses.

Speaking to the Irish Examiner, Michael O’Neill, of Fernhill House Hotel and Gardens in Clonakilty, Co Cork, said the decision by Finance Minister Jack Chambers to not reintroduce the rate was “devastating for the industry”.

“It is very short-sighted… We’re all gutted. Things were tough before and they are going to get tougher,” he said.

“The Vat was a big thing and it is just shocking for the industry.” 

“It is very disheartening for everybody in the industry, it is going to take all the energy out of it. You see [Jackie] Lennox’s is going and I can really see that being the tip of the iceberg. It’s going to get worse, and worse, and worse,” Mr O’Neill said.

Mr O’Neill was referencing the unexpected closure of the famous Jackie Lennox’s in Cork which was founded in 1951 and widely regarded as an institution in the city. It will cease trading on October 6 with the loss of 30 jobs.

The reintroduction of the 9% Vat rate garnered support in recent weeks most importantly from Enterprise Minister Peter Burke, who was reportedly pushing for it in budget negotiations.

However, the measure has long been opposed by those in the Department of Finance, with a recent report by the Tax Strategy Group saying it would cost €764m over the course of one year. 

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Mr O’Neill said going into the next year, they just need to manage costs as much as they can in order to keep themselves going.

“We’re family run and we’ve a great team here, we’re trying to put on the best show possible and we’ll do everything we can to make sure that continues. This makes it a bit more challenging for everybody,” he said.

In terms of support for business, the Government did announce an energy subsidy scheme which will provide €170m in support for 39,000 businesses.

However, Mr O’Neill said the Government had been “notoriously bad” in giving out grants so he “won’t be holding out hope for it”.

Looking on the positive side, Mr O’ Neill acknowledged the budget was set to put a lot more money back into people’s pockets, which could be good for business going forward.

However, the Government announced an 80c increase to the national minimum wage, bringing the rate to €13.50 an hour.

On this issue, Mr O’Neill was not too concerned, saying wages go up every year and it was “important that everyone is paid well”.

Overall, he said they are trying to “stay positive”, adding that they have a good team at the hotel going into the next year.

“We’re looking forward to welcoming customers,” he said.