The Irish Hotels Federation has said that a rumoured increase in VAT would make them “uncompetitive”. 

Minister for Finance Paschal Donohoe slashed VAT on the hospitality sector from 13.5% to 9% as COVID restrictions saw the number of visitors to Ireland plummet. Now restrictions have ended it is reported that he wishes to return it to its original rate in the upcoming budget. 

It is a proposal that the sector says will put that at an disadvantage compared with other countries: 

“70% of our tourism revenue in 2019 came from international tourism,” Hotels Federation President Denyse Campbell told Newstalk. 

“So if we were to increase it back to the 13.5% [rate] we would see that it’s going to make us uncompetitive against other European countries. 

“And that would be a problem and it would restrict growth and make us uncompetitive.” 

A hotel room is seen in June 2009. Picture by: Brian Jackson / Alamy Stock Photo

Over the summer, the sector was dogged by accusations of “price gouging” as the cost of holidaying in Ireland soared. However, Ms Campbell says Dublin comes off well in comparison to other international tourists hotspots: 

“Dublin compares favourably with other European cities,” she claimed. 

“In July, the average rate for Dublin was €187.33; that’s compared to Edinburgh which was €214.87 and Rome was €215.74 and London was €262.09. 

“So there is value in Dublin.” 

Regret

Yesterday, Minister for Finance Paschal Donohoe refused to confirm or deny what his plans for the sector were but he did say that he had been unimpressed by their behaviour over the summer.

“I do really regret, really regret what has happened over the last number of months where we have seen pricing that I believe has undone some of the good work that has happened when our hotels in particular were reopening,” he told The Pat Kenny Show. 

“And I believe our hotels and hospitality sector and the value that they give is a really important part of our economy… but I’ll take all of this into account in the decisions that we make on budget day - which is a week and a half away.”

Budget 2023 will be delivered on 27th September. 

Main image: Interior of a hotel room.