Dalata chief McCann attacks ‘imbalanced’ Vat rate report
THE CEO of Ireland’s largest hotel group has hit out at a report that criticised the tourism sector’s special 9pc Vat rate and insisted he’s not given up hope that it will be retained in next month’s budget.
A July report from the Department of Finance said that the 9pc Vat rate that was introduced in 2011 is now a “significant deadweight” on the economy and that reverting to a 13.5pc rate would not damage the tourism industry.
It said the reduced rate had cost the Exchequer €3.2bn between 2011 and 2018.
The Irish Congress of Trade Unions has also said it’s time to move back to the 13.5pc rate.
But the tourism sector says the cut has helped to create tens of thousands of jobs.
And Dalata CEO Pat McCann yesterday branded the report as “so imbalanced”.
“It never mentions anywhere what has actually happened as a result of the Vat reduction,” he said and added that for 2018 the Vat take from the 9pc rate is “heading towards €1.1bn”.
“This idea that it’s a drag on the Exchequer is simply not true at all, it’s not borne out by anything,” said Mr McCann.
“The other point that wasn’t addressed is the 79,000 jobs that have been created as a result of it,” he said.
Mr McCann, speaking yesterday as Dalata reported strong first-half results, said Dalata should not be a proxy for how the wider Irish hotel sector is performing. “We’re not the industry,” he said. “We would outperform, and it’s probably a bit unfair on my colleagues in the rest of the industry who don’t have the same resources or the same level of expertise that we have across Dalata.”
The group warned that if the Vat rate reverts to 13.5pc, it would cut its annual revenue figure by about 2pc.
Mr McCann said that if the rate is to be raised, that the sector should be given 12 to 18 months to prepare for it.
Dalata said its revenue in the first half of the year rose 10.6pc to €180.6m, while its earnings before interest, tax, depreciation and amortisation (ebitda), was up 12pc at €50.3m.
Despite the group announcing a maiden dividend, and its ebitda being ahead of forecasts, its shares fell 3.7pc in early trading and were 4.2pc lower by the afternoon.
The company has agreed to buy a new hotel in Manchester that’s expected to open in 2021. The four-star, 276-room hotel will operate under Dalata’s Maldron brand, and will be its third hotel in the city.
Last week, Dalata also announced that it has agreed to pay €100m to buy a new hotel in London.
Dublin accounted for 64pc of Dalata’s ebitda in the first half. Dalata’s revenue per available room in the capital was up 10.3pc, while its average room rate in the city was 5.7pc higher at €122.38.
In regional Ireland, Dalata’s average room rate rose 7.2pc to €91.98.
‘The idea that it’s a drag is simply not true at all it’s not borne out’