Donohoe 'through the roof' at hotel price gouging
One attendee at the conference said Finance Minister Paschale Donohoe 'had his homework done'. Picture: Gareth Chaney/ Collins Photos
Finance Minister Paschal Donohoe has sharply rounded on hoteliers over price gouging customers at what was due to be a pre-Budget meeting.
Mr Donohoe is understood to have gone "through the roof" when he met with representatives of the hospitality sector claiming that many politicians now believe that the special Vat rate should be increased because of the astronomical prices hotels are charging customers.
While representatives of the hotel sector had gone into the 45-minute meeting seeking to retain the lower 9% Vat rate in next month's budget, they were quickly reprimanded by Mr Donohoe.
It is understood the minister told representatives that the Government had provided strong supports for hotels in recent years which had got them through Covid-19. He said he was therefore extremely disappointed that value for money for those looking to holiday in Ireland had become a serious issue so quickly after restrictions were lifted.
One person who attended the discussion said: "He went through the roof over the price of accommodation."
Another source said he "had his homework done" and was able to quote back hotel prices.
"He referenced that it was over €500 for room tonight with the American football game on in Dublin," one person at the meeting said.
"He was not impressed, the phrase he used was, 'I've never had as many politicians looking for the Vat rate to be increased' and effectively that is due to accommodation prices."
Sources who attended the meeting said representatives had been taken aback by the sharp comments, but said there was a muted acceptance that some hotels are now over-charging.
The special 9% rate was introduced in November 2020 to help those providing tourist accommodation, as well businesses that were severely impacted by Covid restrictions including restaurants cinemas, theatres, museums, and hairdressers.
In May, Mr Donohoe extended the measure for another six months at an estimated cost of €250m.
As well as the Irish Hotels Federation and the Irish Tourism Industry Confederation, the meeting was also attended by the Licensed Vintners Association, the Vintners' Federation of Ireland and the Restaurants Association of Ireland.
It is understood that the representative groups held a separate meeting after their discussion with the Minister during which hoteliers asked that Mr Donohoe's comments not be leaked.
Other issues raised with Mr Donohoe included the cost of energy and the impact that is having on business, high insurance premiums and the skills shortage in the industry.
It is understood the two vintners' organisations called for reductions in excise on alcohol in September's budget.
Meanwhile, the Restaurants' Association pointed out that the cost of beef, chicken, dairy, cooking oil, and bread had risen on average by 66% due the war in Ukraine, putting pressure on many in the industry and asked for a targeted financial support package to help with the cost of energy.
The meeting was among a number held by Mr Donohoe with representative bodies this week before bilateral discussions with individual ministers begins around their budget asks.
Mr Donohoe will have around €1bn to play around with in new taxation measures. While Fine Gael leader Leo Varadkar has been pushing strongly in favour of a new 30% income tax rate, this suggestion has been played down by others in Government. Instead an indexation of income tax, which would see middle-income workers hit the 40% rate of tax at a higher level, is being mooted.
