Hotels must reduce prices or lose VAT concession

15 August 2016

Statement by Joe Costello

The hospitality industry is beginning to rip off the customer once more as it did during the Celtic Tiger years.

Last year the price of a double room in a Dublin hotel increased by 28% in the twelve month period from August 2014 to August 2015.  This year, data analytics specialist, STR has determined that the average daily rate of a hotel room in Dublin has increased by 19.3% between July 2015 and July 2016.  This is close to a whopping 50% increase in two years.  Clearly the industry is hell-bent on killing the golden goose.

Last year the bed occupancy rate in Dublin hotels was an EU leader at over 80%.  This July it was a massive 90.2%. 

The revenue garnered per room in 2015 grew by 23.3% in 2015 according to Price Waterhouse Cooper (PWC) financial consultants and is expected to be the highest of all European cities next year.

It is little wonder that the Global Web Summit which brought 30,000 wealthy visitors to Dublin in 2015 moved to Portugal in 2016 due partly to exorbitant bed and breakfast prices in Dublin’s hotels.

When the previous administration came to power in 2011, the hospitality industry was on its knees.  To kick-start the industry again the Government reduced the VAT rate from 13.5% to 9%.  The measure was hugely successful and now the country has record tourist levels and our hotels are full.  The reduced VAT is a loss of at least €600 million annually to the exchequer.

However, the hospitality sector has not reciprocated by giving the customer a good deal.  There is now absolutely no reason why the Government and the taxpayer should any longer support the hospitality industry and the hotels in particular through tax concessions.   A lot of essential and hard-pressed services could be supported for our citizens if the full VAT returns were retained by the exchequer.

At the very least the Government should demand a sharp reduction from the hotel industry or face the loss of 4.5% VAT reduction in the forthcoming budget.