IHF Members Report Escalating Costs
Escalating business costs, particularly in energy, are placing an incredible strain on hotels and guesthouses across Ireland seeking to rebuild after an unprecedented two years of the pandemic, Irish Hotels Federation (IHF) president Elaina Fitzgerald Kane said today (Monday 28 March).
Speaking as more than 450 hoteliers and guesthouse operators gathered in Cavan for the IHF’s annual conference, Fitzgerald Kane said that the government must do everything within its power to minimise the impact of these costs on tourism, with the first step being to scrap the proposed increase in tourism VAT, planned for later this year.
Statements By Fitzgerald Kane
Fitzgerald Kane stated, “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. Our sector – which is at the heart of communities throughout the country, supporting over 270,000 livelihoods, pre-pandemic – is being placed under real pressure by price hikes across all areas of operation.
“Hotels and guesthouses are reporting year-on-year increases of 88% in energy, 22% in water, and 18% 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, with three in four hotels (77%) significantly impacted by escalating business costs.”
Fitzgerald Kane said that, to maintain international competitiveness in this escalating cost environment, it is essential for the government to provide certainty on the continuation of the 9% VAT rate for the tourism and hospitality industry as soon as possible.
Fitzgerald Kane said, “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 9% 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% of these jobs located outside of Dublin.
“The certainty over the 9% VAT rate is vitally important. Many hotels – as well as tour operators – begin contracting for international business up to two years in advance. Our current 9% VAT rate has only been committed to until September this year, and this date is now looming large. The continued ambiguity is causing uncertainty in our highly competitive international marketplace, and particularly as we seek to restore international connectivity to our island nation and rebuild international tourism in the aftermath of the pandemic.
“Increasing Ireland’s VAT rate to 13.5% would make Ireland a European outlier. Of the 27 EU countries, the VAT rate on accommodation is lower than 9% in nine countries, 9% in six countries, and exceeds 13.5% in only one country: Denmark.
“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 9% VAT rate has proven to be the right rate of VAT when compared to our European competitors and must be maintained.”
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