Friday 21 October 2016

Hotels that rip off guests for big sporting events should be made to sign a pricing pledge

Published 09/11/2015 | 02:30

'There are hoteliers out there who have turned the lower VAT rate into a tip'
'There are hoteliers out there who have turned the lower VAT rate into a tip'

The woman in front of me in the queue asked how much it was to book a room in the Dublin hotel. I didn't hear the quote but I did hear her reply. " I only want a room. I don't want to buy the place."

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The hotels in Dublin have upped their prices. The days of bringing bulky army surplus sleeping bags under oxters are back, and most affairs are carried on in traditional venues such as in the backs of cars. A Dublin hotel manager told me one time he had built up to 112pc occupancy. Being the canny economist that I am I spotted the flaw straight away. "112pc?" I asked. "The lunchtime trade," he replied. There are different kinds of wraps.

We spotted the upward trend some time ago and issued a profits warning here. But no one took any notice. I should've changed my name by deed poll to Nostradamus, or even David McWilliams, who successfully predicted the bust here and now he's been proved right about Australia.

Some of our finest and biggest hotels were bought up by investors, and as we all know investors invest to make a handsome return on their investment. Fair enough, but when prices are shooting up, well then there's a rip-off that will eventually damage our economy. In the last year alone, hotel prices have gone up by 20pc. But the real increases come at peak time when hotels charge much, much more than their off-peak rates.

There was a time in mid-recession when Dublin was great value and so it was tourists came from all over. Tourism kept Dublin going in the bad times. And it was all-year-round tourism. Dublin is a friendly city. We are a friendly people. Tourists tell me it's not just the sights that attracts them to Ireland but the people. We are a nation of talkers and we are dying for the bit of news. Dying to find out all about you. There are places where you wouldn't get a word out of a native. I love Dublin and I love Dubliners too, other than for an hour or so on the third Sunday of some Septembers.

But many Dublin hotels are going too far. Fans were hit hard on All-Ireland weekends in a good many hotels. To be fair, many more hotels held their prices. The Sandymount Hotel had a double room for €120 and it's only 10 minutes' walk from the Web Summit.

I was in Cardiff for two of Ireland's Rugby World Cup games. The Welsh love us but the Cardiff hotels behaved disgracefully. A good many Irish supporters stayed in Bristol, just over the Severn Bridges in England. I have been told by many of our supporters that they will not be returning to Cardiff, which is a pity because the plain people of Wales have a very real empathy with us and our cracked Celtic ways.

The Irish Rugby Football Union has put in a bid to host the 2023 Rugby World Cup. Our country would be the ideal venue because by then we should have the stadia in place, the country is small enough so there will be no need to travel long distances between venues, and we are a friendly race. Hotels that rip off customers for big sporting occasions must be made to sign a pledge that they will maintain prices at a fair level.

This could be a major part of our bid. If the hotels are allowed free rein, they will do incalculable damage to our tourist reputation. The Irish bid committee for the Rugby World Cup has done some marvellous work, firstly under Hugo MacNeill and now Dick Spring. I would be surprised if our bid does not succeed.

But we must threaten the hotel industry that they too must play their part in what will be a massive financial boost for our country. Short-term greed inevitably leads to long-term disaster. The VAT rate on hotels is 9pc. The rate was reduced by Michael Noonan as a part of a Budget stimulus to boost tourism and help an ailing industry.

The original idea was an excellent one and worked well. There are now an extra 23,000 working in the sector, and that's only since 2011. But there are hoteliers who have turned a subsidy into a tip.

We saw the same problem in the housing industry. There were all sorts of grants to help young people get on the property ladder and for a while the grants were a great help but then bit by bit the builders built the grants into the price, and so what was meant to be a helping hand for young people was lost in a price hike. The effect of the grants was to push up the price of property. And so it is with hotel prices in Dublin. If history is anything to go on, and it usually is, what happens in Dublin today will spread down the country. Right now, most of the time, in most places but not everywhere prices are fair enough.

Michael Noonan has a good idea of what's going on around him. He mixes, drinks the occasional pint and doesn't confine himself to the office or to reports from economists and civil servants. Up until this year the reduction in VAT was subsidised by a 0.6pc tax on pensions. So we had Irish pensioners subsidising the profits of Russian multi- millionaires on All-Ireland final weekends. The pension tax was abolished in this year's Budget. Michael Noonan issued a threat in his Budget speech but I'm not so sure if anyone picked up on it.

Here's an excerpt: "In the light of reports of rising prices in this sector, it is incumbent on the industry to ensure that this relief continues to be passed through fully to the consumer. However, let me be very clear, the taxpayer cannot be the only stakeholder keeping costs down in the sector. If prices begin to rise, the case for retaining the measure diminish."

That's the official record but Mr Noonan also said, off-script, there was concern about the high prices charged by Dublin hotels in and around the time of major sporting weekends, and he did indicate there was also a difference between city and country prices.

Don't say you haven't been warned.

Irish Independent

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