Business Irish

Monday 25 September 2017

Hotels: Keeping VAT at 9pc crucial for future of business

Majella O'Sullivan

By Majella O'Sullivan

THE majority of hoteliers are still concerned about the future of their businesses despite over half reporting an increase in business in the past year.

Most hoteliers believe the maintenance of the reduced VAT rate for tourism at 9pc is crucial for the future of their business and 42pc are looking at taking on additional staff because of this.

An industry survey conducted on behalf of the Irish Hotels Federation (IHF) found that 53pc of hoteliers are seeing an increase in business compared with this time last year and 90pc have said the reduced tourism VAT has boosted trade.

However, 71pc say they are still concerned about the future viability of their businesses while 96pc say they are concerned the Government won’t maintain the reduced VAT rate next year.

Hoteliers in Dublin, Cork and Galway are benefiting from event and business-related tourism, the survey finds with growth also evident in the east, midlands and southeast.

But occupancy levels continue to lag in the Shannon region and in the southwest of the country.

Other factors that continue to concern the industry are “excessive” local authority rates and high electricity and gas prices.

Limited availability of credit continues to dog hoteliers with almost one-third (31pc) admitting difficulties getting standard credit facilities from their banks in the last year.

IHF chief executive, Tim Fenn, said the Government needed to provide greater medium-term certainty around the VAT rate so that international tour operators could plan trips to Ireland with greater certainty.

He said: “While the rate reduction has greatly benefited tourism business, it needs to be more than just a short-term measure if we are to achieve sustained growth in visitor numbers. This is particularly important for domestic and international tour operators which are a vital component of the hotels sector.”

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