‘Costs are off the absolute charts’, say Cork hoteliers

CORK hoteliers have pleaded with the Government not to increase the current rate of Vat which stands at 9%.

Despite the Cabinet recently signing off on extending the 9% Vat rate until February 2023 for the hospitality sector, the Tánaiste Leo Varadkar has in recent days warned the hospitality industry that some hotels overcharging consumers could result in the Government increasing the rate of Vat for the sector next year.

Spiralling increases in hotel prices and a shortage of accommodation have led to criticism from domestic holidaymakers and international tourists. However, hoteliers have cited the rising cost of utility bills as a big factor in increasing hotel prices for consumers.

Michael Magner, who owns Vienna Woods Hotel in Glanmire, said it is necessary for the tourism Vat rate to stay at 9%. “The Government have been fantastic during Covid. We need to work together, and we will find the right solutions. We are in very challenging times in terms of the cost of doing business which is very concerning. It is necessary for Vat to stay at its current rate because we are only in a state of recovery,” he said.

Mr Magner said the Vat rate is required to protect the jobs of people who work in the sector. 

“We need to protect the jobs of the people that are working in our sector. There are 240,000 people employed in the tourism and hospitality sector nationwide and those jobs need to be protected. Measures like the 9% Vat make it possible for hotels, restaurants, and businesses to protect it. The cost of doing business at the moment in Ireland is a direct result of what is happening in Ukraine.”

The Cork hotelier said he is confident the season will be a good one. “I think the season is going to be good and strong. Moving forward we need to ensure that we have a sustainable industry. Measures like the 9% Vat rate ensure that there is continuity and some degree of certainty,” said Mr Magner.

“Costs are off the absolute charts,” said Neil Grant, general manager of the Celtic Ross Hotel in Rosscarbery.

Mr Grant said bills have increased substantially in recent years. “My insurance in 2019 was €60,000 less than this year. We are still not trading at full levels. Our linen costs have gone up by 40% since November 1. Food costs are at least 20% up across the board. We signed a contract for electricity last summer which is due for renewal next month. In the early quotes we are getting the rates are double what we are paying now.

“When you are adding all that stuff up a bit of context is needed. Hotels are very expensive to run. We are back paying rates. Our recruitment costs have skyrocketed. We are struggling to find labour. We are recruiting from abroad, so we are paying agency fees which we previously never had to.”

Mr Grant added: “9% is almost in the middle of the Vat rates in Europe. If it gets increased up to 13.5%, we will have the second highest Vat rate in the EU. Keeping it at 9% saves jobs. We are at the mercy of the market. We are always juggling the pricing to see can we cover ourselves.”

Cork IHF chair Joe Kennedy said: “We are experiencing costs that are unprecedented. It is nearly a sensible move to keep the Vat at 9%. We are seeing 80% increases in our utilities such as gas and electricity compared to 2019 levels. This is a huge hit. The cost of food and beverages has also increased by 20% compared to this time last year. Our complete cost base is out of kilter from what we were used to.”