Hotelier warns that VAT increase will cost many jobs in Limerick

Irish Hotels Federation Shannon branch Vice-Chairman Dermot Kelly.

A SENIOR Limerick hotel representative has warned that the industry will be crippled and jobs lost if the Government decides to up the rate of VAT next week.

Dermot Kelly, Shannon Region Vice Chair of the Irish Hotels Federation, told the Limerick Post that the industry, and hospitality in general, is already fighting a massive battle and needs the rate to stay the same if it has any hope of retaining jobs.

“We need to have a stable VAT rate. We’re taking bookings for 2024 and 2025 but it’s impossible to quote prices when we don’t know what the rate is going to be,” he said.

He warned that a VAT increase to 13.5 per cent – which is the rate being proposed – could be the death knell for many businesses across the hospitality sector.

“It’s predicted that there will be 24,000 job losses across the hospitality industry if this goes ahead. I feel extremely sorry for pubs and restaurants that have no accommodation to fall back on.”

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The tourism industry is the largest indigenous employer in the country, supporting 270,000 livelihoods prior to the pandemic, including 12,000 jobs in Limerick.

VAT is just one of a number of moving pieces in the mechanism of price rises that hotels, bars, and restaurants are trying to cope with, Mr Kelly said.

Foreign tourism is still 27 per cent down on pre-pandemic levels, coming on the heels of the two years of the pandemic, during which the hotel industry lost €5 billion in revenue.

Mr Kelly said that his own venue, the Shannon Springs Hotel, clearly demonstrates what is happening to costs in the sector.

“Everyone has seen what’s happened with the price of groceries. In the context of a hotel, we have seen multiple price rises in the last six months.

“The latest invoice we got from a supplier, the price of some items had gone up by 28 per cent, and that’s before any VAT increase.

“We’re talking about basic items here – basmati rice, baked beans for the breakfasts. We’ve put our prices up marginally but nothing like the extent the costs are going up.”

And while much has been made of the energy supports of up to €10,000 offered to businesses by Government, Mr Kelly said that there has been a very low take-up.

“They’re not transparent and they’re very unwieldy. A business can only claim back if they are using natural gas, not the large bottled gas that a lot of places use because natural gas is really only available in cities and big towns.

“And it only applies since September/October but there have been massive energy price increases before that.”

Using the Shannon hotel as an example, Mr Kelly said: “We have got our bills for electricity gas and oil for the month of December just gone and they come to €34,000 for just one month.

“The same bills in December 2019 came to €11,000,” he explained

“We really need to have VAT stay at the rate it is. If we put prices up, people who are already hit themselves will stop coming out and spending with us. And it’s jobs that will suffer.”