Dublin hoteliers are concerned for the 2023 economic outlook as future bookings have seen a drop.
Despite an uplift in business during 2022 following Covid-19 restrictions, overall room occupancy rates are significantly down when compared to 2019. The average room occupancy in Dublin hotels was at 75 per cent for the first ten months of this year, down by nearly 10 per cent compared to the same period in 2019.
“Spiralling” business costs, reduced forward bookings, and a planned increase in the tourism VAT rate at the end of February 2023 are all piling pressure on the Irish tourist industry, according to the Irish Hotels Federation.
Energy costs are now running at a tenth of total revenue for the average hotel, says IHF CEO Denyse Campbell. “For an average 70-bedroom hotel this means an increase of €380,000 in annual energy costs.”
The support scheme the Government introduced in Budget 2023 has qualification criteria that are “far too restrictive for hotels”, and they are also seeing increases across the cost of food suppliers, beverages and insurance costs. There is also growing uncertainty in their overseas markets, and despite an uplift in tourism during this year, forward bookings for 2023 are down significantly on 2019 in key international markets.
The Government’s decision to increase the Tourism VAT rate to 13.5 per cent at the end of February 2023 was “compounding the challenges facing businesses”, Ms Campbell said, adding that “the last thing the Government should be doing is adding to inflationary pressures”.
Tourism VAT is currently at a reduced rate of 9 per cent. In Budget 2021, the Government brought down the VAT rate for the hospitality and tourism sectors from the previous 13.5 per cent as part of its response to the pandemic. However, going back to the previous rate “would make Ireland an outlier amongst countries in Europe who prioritise tourism”.
“Consumers and overseas visitors will be paying the third highest tourism VAT rate in Europe,” said Ms Campbell. “We have done really well to rebuild employment levels in the tourism industry back to 90 per cent of the pre-pandemic level,” she added. “We should now be seeking to restore and grow tourism, and not undermine it with a VAT rate hike.”
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