A CORK hotelier has described the decision to increase VAT for the hospitality sector from 9% to 13.5% as a ‘kick in the guts’ for their industry.
Aaron Mansworth of the Trigon Hotel Group, which includes The Metropole, Cork Airport Hotel and Cork International Hotel, made the comments after Minister for Finance Paschal Donohoe announce the decision to increase the rate by 4.5% from January 2019 - a move he expects will raise €466m for Government coffers.
The tourism industry had enjoyed a reduced rate since 2011 and various groups lobbied hard for its retention.
"26 countries in the EU now have a better VAT rate than Ireland and it does a lot of damage to our competitiveness,” Mr Mansworth said.
“And of all the years to do it, with the current uncertainty around Brexit, it’s not making for a pretty picture for us, particularly regionally.”
Neil Grant, Chair of the Irish Hotels Federation (IHF) Cork branch, said the increase represents a reckless failure to recognise tourism’s economic potential and importance, particularly to rural Ireland.
Mr Grant echoed Mr Mansworth’s concerns about the uncertainty around Brexit and said they were already being affected by weakened sterling.
“UK tour operators, for example, represent up to 30 per cent of the business for many hotels,” he said. “This business is highly competitive, with Irish hoteliers competing internationally. Margins are slim and vulnerable to any price fluctuation.
“With bookings made up to two years in advance, prices in many cases are already contracted, meaning hoteliers will have no choice but to pick up the cost of this VAT increase. For some, it may wipe out their margin altogether.”
Mr Mansworth emphasised that businesses would have no choice but to pass on the 50% increase in VAT to their customers, something that will also affect Irish holidaymakers staying in the country.
“Unfortunately, it will be passed on, this isn’t a charge that we are going to be able to absorb,” he said.
“Come January 1, you are going to see price hikes across the industry. This will impact everybody.
“I think we were a soft target, it’s a hard one to take. Through good and bad times, we have fought our corner and provided employment. Different sectors fluctuate in upturns and downturns, we have always been consistent and tried to provide jobs.
“But we hoteliers are resilient, we have taken knocks before and gotten up and gotten on with it and that is what we will have to do.”