THE Irish Hotels Federation (IHF) has told its members to re-calculate their prices and advertise the new lower rates for accommodation, food, weddings and leisure centre, pool and gym fees by the end of next week.
In a strongly worded letter, IHF president Paul Gallagher said that by not passing on the VAT reductions, hoteliers were effectively introducing a 4.1pc price increase at a time when the Government had moved to support the industry.
"It is critical that we send a clear message to Government that we, as an industry, can work with them to use this and any other initiatives to improve competitiveness and set Irish tourism and the hotel and guesthouse sector back on a path to growth and thereby increase employment," Mr Gallagher said.
Hoteliers and those providing food and accommodation in Ireland have an opportunity over the next few months to continue to offer great value to their customers, the IHF said.
"This is also an opportunity to reinforce the message that Irish tourism represents great value for money.
"Passing on the value of this VAT cut to consumers is the best means we have to demonstrate that this VAT reduction should be made permanent," Mr Gallagher said.
The industry should expect that the Government will be tracking this initiative and monitoring whether the VAT cut has been effective in stimulating tourism.
Finance Minister Michael Noonan has said it will be reviewed at the end of 2012 to decide whether it will be continued in the 2013 Budget.
"We can expect the Government to reverse the cut in VAT if we do not pass it on," Mr Gallagher said. "It is not important to you whether or not an intermediary passes on the reduction, but it is important that you pass it on."