Rates paid by hotels should be re-invested in visitor experiences, says Cork hotelier 

Tourists in Ireland, whether domestic or from abroad, pay more tax than they would elsewhere, such as in a city like Lisbon, Venice, or Barcelona, the Cork-based Irish Hotels Federation (IHF) president, Michael Magner, has said. 

It comes as a tourism tax has been mooted for Dublin.

Mr Magner, the owner of the Vienna Woods Hotel, who took up the IHF presidency last year, also said that a portion of the commercial rates paid by hotels should be ringfenced to “reinvest back into the public realm, in terms of visitor experiences”.

“As a commercial rate payer myself, when I see my commercial rates being paid into the local authority, knowing that a set percentage of it is reinvested back into activity that could be connected to my business, then I support that type of initiative, which is very clever, broad-thinking and strategic,” he said.

“Not all authorities do it, but for those that do it, it’s a very good way of making sure that people in business who are paying the commercial rates are happy to do so.

“Taxes are a challenge, and the cost of doing business is difficult at present,” Mr Magner added.

A tourism tax for Dublin has been floated as a possibility, after a briefing note prepared for Enterprise Minister Peter Burke echoed a Dublin City Council proposal last year that tourists pay an additional 1% tax.

This would have yielded €12m annually for the local authority. 

This, however, would make Ireland uncompetitive as a tourism destination, Mr Magner said, at a time when hoteliers and others are trying to attract more tourism to the country.

“On average, hoteliers across the country pay €1,000 per bedroom per year in commercial rates,” he said.

“Hospitality and the hotel industry are serious rate-payers in this country: We pay a huge amount of money because commercial rates are calculated on the basis of the physical size of your business, as opposed to the turnover that your business has.”

Mr Magner said this meant that a small corner unit in a busy city location could potentially be paying a fraction of the rates of a hotel, despite having a much larger turnover and profit.

The hospitality sector was already hit by the 13.5% Vat rate for food, as well as the 23% Vat rate for other services, and these taxes, added to the other costs, such as labour, material, energy, and others they have to pay, all have a negative impact on profit, he said.