Hotelier warns against VAT hike
A well-known Wexford hotelier has written a letter to all local T.D’s ahead of the forthcoming Budget, appealing for a retention of the existing VAT rate at 9% and warning that there will be job losses if it is increased.
Bill Kelly of Kelly’s Resort Hotel in Rosslare said any increase will have a dramatic effect on rural Ireland and will lead to job losses in the restaurant, hotel and tourism sectors even without the added prospect of a hard Brexit.
In the letter to Wexford Oire- achtas members, Mr. Kelly said there has been much talk recently about a return of the 13.5% VAT rate for the hospitality and restaurant trade.
‘We are only showing growth in tourism for the past two years after eight very difficult years’, he pointed out.
‘ There is this perception that we are back to the old ‘rip off Ireland’ with restaurant prices and hotel rates, this is far from the situation we are experiencing. Dublin has certainly seen higher hotel rates due to lack of supply, but this deficit is beginning to be addressed with over 750 new rooms on the market this year and more to follow.’
‘ The only thing that has kept the rest of the market going outside Dublin is the 4.5% VAT reduction’, said the hotelier who enclosed a comparison of hotel rates in 2008 and 2018 with the letter.
‘Our rates are still lower 10 years on across the board with the exception of the summer season. In this same period food cost has increased by 15-18% and many state-controlled or influenced costs in particular have not come down including local authority rates, water and energy costs (up 5% since 2005) remain a substantial burden.’
‘An increase in VAT will have a dramatic effect on our competitiveness with most of our major European competitors having lower VAT rates than Ireland including France and Germany, each at 7%, while other major tourism destinations already have low rates e.g. Portugal 6%, Greece 6.5% and Spain and Italy both at 10%’, he said. ‘It will also stop the much needed regeneration of the hotel product, which lacked investment throughout a difficult decade.
‘ The retention of the 9% VAT rate is essential to attract foreign tourists and with Brexit and the declining British market, down 6% in 2017, but also to keep domestic demand competitive’, he said. ‘ Total tourism and travel expenditure by Irish residents overseas was €6.59 billion in 2017. A strong domestic tourism market is a vital element in the recovery of the industry as a whole , it is not just about Dublin; we have to remain competitive in the domestic market to stop this outflow of Irish money to our competitors’, said Mr. Kelly.