Retention of 9% VAT rate essential to survival of hospitality sector

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IHF President Elaina Fitzgerald-Kane addressing delegates at the annual conference on Monday.

RISING costs are putting an incredible strain on Irish hotels and guesthouses, making the retention of the nine per cent VAT rate an essential element of their survival.

That’s the view of County Limerick hotelier Elaina Fitzgerald Kane who, in her role as President of the Irish Hotels Federation (IHF), said that the Government must do everything in its power to minimise the impact of rising prices on tourism.

Speaking at the IHF annual conference in Cavan yesterday, she said that the first step would be to scrap the proposed increase in tourism VAT rate planned for later this year.

“Having only just weathered the storm of Covid-19, hoteliers and guesthouse operators are now facing into a gale of spiralling operational costs which are putting an unbearable strain on their businesses,” she explained.

“Hotels and guesthouses are reporting year-on-year increases of 88 per cent in energy, 22 per cent in water and 18 per cent in food  and beverage, as well as significant insurance increases. Given that we already operate in a high-cost environment, these levels of increase are placing an incredible strain on businesses”.

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Ms Fitzgerald Kane said that to maintain competitiveness, it was essential for the Government to provide certainty on the continuation of the nine per cent VAT rate for the tourism and hospitality industry as soon as possible.

IHF President Elaina Fitzgerald-Kane and chief executive Tim Fenn at the annual conference in Cavan on Monday.

“The Government has gone the distance throughout this very trying pandemic in terms of supporting livelihoods and businesses in the tourism sector, and this has put us in a stronger position to recover than some of our international competitors.

“Continuing that support now with an extension of the nine per cent VAT rate, until business levels stabilise, will underpin this great work and have a direct impact on the 270,000 tourism and hospitality livelihoods – one in ten of all Irish jobs, with 70 per cent of these jobs located outside of Dublin.

“Tourism will recover, but it will take time, and businesses need certainty to allow them to plan properly for this year, and indeed years, ahead. The nine per cent VAT rate has proven to be the right rate of VAT when compared to our European competitors and must be maintained,” Ms Fitzgerald Kane declared.