Limerick hospitality sector wants lower VAT rate retained

Irish Hotels Federation Shannon Branch Chairman Stephen O'Connor.

LIMERICK hotel and guesthouse owners have renewed their call on the Government to retain the nine per cent tourism VAT rate in response to very challenging economic headwinds facing the sector over the next 12 months.

Research by the Irish Hotels Federation (IHF) indicates that the sector is now at crucial juncture as it grapples with economic slowdowns in key overseas markets, escalating business costs and the impact of inflation on discretionary consumer expenditure.

Of particular concern is the bleak economic outlook for the UK with inflation having reached a four-decade high and the country facing the risk of a prolonged recession. This is worrying for hotels and other tourism businesses given the UK has traditionally been the biggest market for overseas visitors.

IHF Shannon Branch Chairman Stephen O’Connor expressed deep concern about the impact the proposed VAT increase would have on an industry still recovering from the pandemic.

“Consumers in Ireland and across our overseas markets are already being squeezed by exceptionally high levels of inflation and other pressures on their finances, which means there is a very real risk that many will pull back from spending on discretionary items such as holidays and breaks away.

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Mr O’Connor said that far from being an exceptional measure, most European countries have a low VAT rate on tourism accommodation with 16 of the 27 EU countries having a rate of nine per cent or lower

“This should equally be the case for Irish tourism as our largest indigenous industry, which prior to the pandemic supported over 270,000 livelihoods, including some 12,000 jobs throughout Limerick, generating €327 million in tourism revenues annually for the local economy,” he added.