Gouging hoteliers made the minister very angry

Taxing times: VAT will go back up next February

DON’T make Paschal Donohoe angry. Just ask hoteliers, who’ll tell you that you wouldn’t like him when he’s angry. Reports that Donohoe recently ripped into representatives of the hotel industry at a private meeting where they lobbied him for retention of the preferential 9% VAT rate would appear to have been accurate. Donohoe was more measured in public comments but he believed some hoteliers had engaged in price gouging in recent months. As a result, he wasn’t well-disposed towards extending the reduced rate of VAT at 9% for a longer period. Instead, it reverts to 13.5% for the entire hospitality sector from the end of February next. Rural hoteliers and restaurants must be furious with some of their urban counterparts, although some put up prices too during the summer season. However, it seems that the bulk of the eye-watering price hikes happened in the Dublin area but that gave the entire industry a bad name. Outside of Dublin – other than those hotels that have given their rooms over to housing Ukrainian refugees – it has been a struggle to lift rates and occupancy. Many are facing a tougher year or so ahead of them: a combination of falling numbers (because people may be reluctant to spend too much on home holiday breaks or on going out for meals) and rising costs (electricity and heating bills for hotels, guest houses and restaurants can be massive) will be hard work for these outlets to manage.

Now they’ll find they have to charge higher prices, especially as they also have to face higher minimum wages and more requirements on time off for employees.

All over the country, we face the potential of closures. It is happening already. My own favourite local restaurant – Lenehan’s in Rathmines – closed suddenly last week because of financial issues. It leaves a sizeable gap in the heart of the suburb, one where two newsagents, a bakery and a sandwich/coffee shop have all closed in the last month or so.

Finding new tenants to run businesses from these outlets may be difficult. New owners and tenants would have to wonder about the utility bills they’d face and the potential number of customers they’d bring through the doors.

In the meantime, the look of the area will suffer as units are shuttered.

It has been a problem all around the country, particularly in rural towns and villages, for many years but it threatens to get worse.