Hoteliers, restaurateurs call for restoration of VAT relief in budget

“This winter will be the death of some of us. Many will close”.

That is the message to Minister for Finance, Paschal Donohoe, from Carolynne Harrison, general manager of the Shandon Hotel and Spa, in Dunfanaghy, Co Donegal.

“It is not even about a no deal Brexit, we can not contemplate that. It is too awful,” she says.

What is of immediate concern to Ms Harrison is the decline in tourist numbers from Britain, which had been showing tentative signs of recovery, before a drop in August. The weakness of the British pound is another problem and Ms Harrison says the industry in the northwest needs the Government to stimulate business with a return to a special, reduced, VAT rate.

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The Shandon Hotel was itself a casualty of the recession and was brought out of receivership by new owners in 2016.

“It had been a seasonal hotel but people have worked very hard and we are now keeping a staff of 130 on all year round,” Ms Harrison said.

The business, a member of the Irish Hotels Federation, diversified into attracting tourists from Europe and the United States. But Ms Harrison says many hospitality businesses in the northwest depend on weddings and “nobody is booking weddings because they don’t know if there will be a Border”.

She said the Government needs to do something with the VAT now rather than wait for a no-deal Brexit.

A two-tier industry

John O’Neill of The Hampton Court Hotel near Enfield in Co Meath also said the VAT issue needs to be reviewed. Market conditions are different in “the Galways, Dublin and Killarneys of this world,” he said. For the Hamlet Court Hotel tour business is already 20 per cent down, and he agreed the main issue is not a potential no-deal Brexit, but an already significant decline in the hotel’s tours from Britain.

Michael Lennon, president of the Irish Hotels Federation said 62 per cent of federation members had seen a drop in business levels from Northern Ireland while almost three-quarters of hoteliers (73 per cent) report a fall-off from the UK. He said there was a two-tier industry, which the Government was failing to address.

Adrian Cummins of the Restaurants Association of Ireland was more militant in his response saying the message for the Government would be “no VAT, no vote”.

He said the level of VAT at about 9 per cent was in line with international experience and warned against Mr Donohoe and his officials “judging the industry by their ability to get a table in a restaurant in Dublin on a Saturday night”.

Tourism Ireland said last year’s ending of the special VAT rate was definitely being felt by hotels across the State, as part of a squeeze which included slower rates of growth and increasing costs such as insurance.

However, in a Dáil response to questions from Fine Gael TD for Sligo-Leitrim, Tony McLoughlin, Mr Donohoe said there did not appear to be a case for a review of the Vat rate. He said “given the impact of an increase in the VAT rate on the hospitality sector has only recently been reviewed by my department and the Revenue Commissioners, there does not seem to currently be a case for reviewing the impact of the increase.

He added “any reduction in VAT rates incurs a cost to the exchequer, which would necessitate recovery elsewhere”.