The business measures announced by the Government last week are disappointing and fall far short of what is required to support small and medium sized regional hotels that are heavily dependent on food services, according to the Irish Hotels Federation (IHF).
“This is a missed opportunity to provide meaningful assistance to our sector at a time of ever-increasing business costs, much of which are a result of the Government’s own policy interventions,” said IHF president, Michael Magner.
“The bottom line is that these measures fail to address the enormous underlying challenges facing our sector, which is an important part of the wider tourism industry. The measures will have a minimal impact for many hotels that are struggling with unprecedented cost increases. This includes many regional hotels that are heavily reliant on food services and are dealing with very tight margins and reduced profitability in what is a very labour-intensive sector.
“Take for example the realignment of PRSI rates. In reality, this will only offset a very small percentage of the enormous cost increases that hotels and guesthouses are experiencing the length and breadth of the country. A fundamental restructuring of employers PRSI is now essential for our sector. This is one area where today’s measures could have made a tangible difference by introducing a targeted rebate on employers PRSI. It is very disappointing that this was not forthcoming,” he said.
RATES GRANT ‘MAKES NO SENSE’
Commenting on the local authority rates grant, Mr Magner states that many of the very businesses that need this support are unable to avail of the scheme. This is because businesses with commercial rates greater than €30,000 are excluded.
“Hotels pay disproportionate levels of commercial rates relative to other small businesses, which means that many small hotels that should be part of the scheme are excluded,” he says.
“The average 25-bedroom hotel, for example, pays rates above the €30,000 threshold and is therefore disqualified, while other businesses with much higher levels of turnover and profit are included. It just makes no sense when these are the very businesses that the Government should be supporting.”
In addition to the enormous cost pressures facing our sector, businesses are grappling with the effects of last September’s VAT increase, which has eroded competitiveness. Mr Magner says: “The impact of the VAT increase has been most pronounced for food-related services in regional Ireland where margins are coming under tremendous pressure. This decision must be reviewed. At a minimum, we believe there is now a strong and immediate case for the Government to reduce the VAT rate to 9% for food-related services within our industry.”
In relation to the increased Government funding for energy efficiency grants, Mr Magner states that, while this is a move in the right direction, greater levels of targeted supports are required to assist tourism and hospitality businesses meet their sustainability and carbon reduction goals.
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