The Irish Hotels Federation has called for the government to rule out increasing tourism VAT from 9% to 13.5% in the autumn.

IHF president Elaina Fitzgerald Kane said escalating costs, particularly in energy, are placing an “incredible strain” on hotels and guesthouses seeking to rebuild after two years of the pandemic.

She was speaking ahead of the federation's annual conference in Cavan this week.

“Having only just weathered the storm of Covid-19, hoteliers and guesthouse operators are now facing into a gale of spiralling operational costs which are putting an unbearable strain on their businesses,” said Fitzgerald Kane.

“Our sector is being placed under real pressure by price hikes across all areas of operation.

In Association with

“Hotels and guesthouses are reporting year-on-year increases of 88% in energy, 22% in water, and 18% in food and beverage, as well as significant insurance increases.

“Given that we already operate in a high-cost environment, these levels of increase are placing an incredible strain on businesses, with three in four hotels significantly impacted by escalating business costs.

The IHF president said that to maintain international competitiveness in this escalating cost environment, it was essential for the government to provide certainty on the continuation of the 9% VAT rate for the tourism and hospitality industry as soon as possible.

“The government has gone the distance throughout this very trying pandemic in terms of supporting livelihoods and businesses in the tourism sector, and this has put us in a stronger position to recover than some of our international competitors,” she added.

“The certainty over the 9% VAT rate is vitally important. Many hotels – as well as tour operators – begin contracting for international business up to two years in advance. Our current 9% VAT rate has only been committed to until September this year and this date is now looming large.”

Of the 27 EU countries, the VAT rate on accommodation is lower than 9% in nine countries, is 9% in six countries and exceeds 13.5% in only one country: Denmark.

Founded in 1937, the Irish Hotels Federation is the national organisation of the hotel and guesthouse sector in Ireland. It represents almost 1,000 hotels and guesthouses nationwide, employing c.65,000 people.