Retaining 9pc VAT rate 'vital' to the competitiveness of tourism sector
Published 02/03/2016 | 02:30
RETAINING the 9pc VAT rate is essential if the tourism sector is to remain competitive, the newly-elected president of the Irish Hotels Federation (IHF) said yesterday.
Joe Dolan claimed the reduction in VAT was the "single biggest job creation strategy since the foundation of the State".
"Our competitiveness, of which VAT is a significant part, is the difference between some hotels staying open that otherwise would have closed, and raising it would be hugely counter productive.
"It's just on a par with our counterparts in Europe and if we can retain our VAT, we can retain our momentum and sustainable growth," he argued.
"Outside of the Dublin, the reduced rate of VAT has actually kept some properties open and people in jobs."
Mr Dolan, who owns the Bush Hotel in Carrick-on-Shannon, Co Leitrim, will be seen as a champion for the small, family-owned hotel.
In 2014, he dramatically halted the auction of the farm of a neighbour at his hotel, which was being sold against the farmer's wishes.
He said at the time it was a small rural community where people shared each other's pain and happiness and that same community had rallied around his family in their time of tragedy.
Mr Dolan's son Andrew (20) died on New Year's Day 2012 after an unprovoked assault.
At its annual conference in the Gleneagle Hotel in Killarney, the IHF also called for a capital budget of €300m for tourism-specific projects over the next five years.
"If we want a solid, sustainable tourism we have to invest directly ourselves. When you invest in marketing tourism there is a return for every euro spent of €34 to the Irish economy and into creating Irish jobs," Mr Dolan added.
"An unprecedented 33,000 jobs were created in the last five years. And in the next five years, creating the same growth alone, we can be confident in creating 40,000 more."
But he rejected criticism these jobs were traditionally low paid. "Hospitality is a low-paid sector but low pay is better than no pay, employment is better than no employment, and emigration is a lot less attractive than being at home," he said.
"We have one of the highest minimum wage rates in Europe and the OECD countries, apart from Luxembourg, so let's keep some perspective here." The IHF has also called for the restoration of funding for Fáilte Ireland and Tourism Ireland.
"Product differentiation, innovation and investment are key to maintaining Ireland's competitive positioning in the international marketplace. This requires continuous investment in product renewal to ensure that our tourism offering keeps pace with changing tastes and global competition.
"Unfortunately, this an area we risk losing significant ground on as a result of cut-backs in funding over the last five years," he added.
Mr Dolan cites a reduction in funding for tourism marketing as another major concern for the industry. Since 2008, Tourism Ireland's annual funding allocation for overseas marketing has fallen dramatically and now stands at an estimated €36m compared to €62m in 2008.
He says the knock-on effect has been a significant drop in Ireland's "share of voice" across key tourism markets and a damaging loss of brand awareness.
He says this is happening at a time when Ireland should be planning ahead and investing in tourism promotion.
Over 400 delegates at the annual conference also heard that soaring insurance premiums were having a detrimental impact on cost competitiveness.
Research carried out by the federation reveals that 71pc of hoteliers have seen an increase of over 20pc on average in premiums over the past year.
Chief executive Tim Fenn warned this was putting enormous cost pressures on hoteliers, resulting in serious risks to cost competitiveness.
Insurance costs within the sector have now reached €36m a year, equivalent to over €640 per bedroom, with costs expected to increase further this year.
Mr Fenn called on the Government to establish an industry taskforce to tackle the issue including a remit to combat fraud and excessive claims.
"Any further increases would seriously jeopardise the viability of many hundreds of hotel businesses," Mr Fenn said.
The research shows that three-quarters of hoteliers (75pc) report being concerned about the overall cost of insurance for their business with 69pc concerned about the legal costs associated with defending claims.
Over half of hoteliers or 53pc say they are concerned about the level of excess required by their insurance provider.