Hotel owners facing into 'gale' of spiralling costs that threaten recovery

The Irish Hotels Federation said certainty over the hospitality Vat rate is 'vitally important'

Irish Hotels Federation president Elaina Fitzgerald Kane is urging the Government to scrap plans to return to a higher hospitality Vat rate in the autumn.

Hotel owners are facing into a “gale” of spiralling operating costs that are putting the sector’s already “fragile” recovery at risk, it has been warned.

The Irish Hotels Federation (IHF) has used the launch of its annual conference, in Cavan, to urge the Government to scrap plans to return to a higher hospitality Vat rate in the autumn. The Government lowered the Vat rate for the hospitality sector from 13.5% to 9% in November 2020 as a Covid support measure, but it is set to return to 13.5% later this year.

“Having only just weathered the storm of Covid-19, hoteliers and guesthouse operators are now facing into a gale of spiralling operational costs which are putting an unbearable strain on their businesses,” said IHF president Elaina Fitzgerald Kane.

Our sector, which is at the heart of communities throughout the country, supporting over 270,000 livelihoods pre-pandemic, is being placed under real pressure by price hikes across all areas of operation.” 

Ms Fitzgerald Kane said hotels and guesthouses are seeing large year-on-year jumps in energy, water, food and beverage, and insurance costs, with nearly 80% of hotels being “significantly” impacted by escalating business costs.

She said certainty over the Vat rate is “vitally important” and increasing it back to over 13% would make Ireland a European outlier.

The hospitality Vat rate is 9% or lower in 15 EU member states and only exceeds 13.5% in one, namely Denmark.

“The Government has gone the distance throughout this very trying pandemic in terms of supporting livelihoods and businesses in the tourism sector, and this has put us in a stronger position to recover than some of our international competitors. 

"Continuing that support now with an extension of the 9% Vat rate, until business levels stabilise, will underpin this great work," she said.