The Irish Hotels Federation (IHF) has urged the Government to act swiftly to offset the impact that Government policies are having on the operating costs of hospitality businesses.
Responding to this week’s Government report examining the cost increases for businesses arising from employment-related measures, IHF President Michael Magner stated that tourism and hospitality is now at a crossroads with Government-controlled costs having a disproportionate impact on businesses throughout the sector.
IHF President Michael Magner said: “The level of cost increases highlighted in today’s report are simply eyewatering for our sector. They echo the warnings we have been repeatedly making to Ministers in recent months about the much sharper increases in Government-controlled costs our industry is experiencing relative to the rest of the economy. This is at a time when general operating costs for hospitality businesses including hotels remain an enormous challenge and continue to increase at an unsustainable rate.”
“The Government must take decisive action to support tourism and hospitality businesses which are a vital part of our economy, supporting some 270,000 livelihoods. Specifically, we are calling for a fundamental restructuring of Employers’ PRSI for our sector, including a targeted rebate for businesses within the sector. The lack of any support to date in relation to PRSI is very disappointing and this must now be prioritised without delay.”
Mr Magner said hospitality businesses are also experiencing the direct impact of the Government’s decision to increase tourism VAT, making Ireland an outlier with the third highest rate of VAT in Europe. As highlighted in this week’s report, the increased 13.5% VAT rate is further adding to the cost pressures for businesses operating in the sector.
“The impact of the VAT increase has been most pronounced for rural and regional businesses and those that are heavily reliant on food and beverage sales with very tight margins. This decision needs to be reviewed. At a minimum, there is now obviously a very strong case for the Government to reconsider its blanket increase given the shocking impact on food-related services within our industry.”
Mr Magner noted that hotels and other hospitality businesses have experienced unprecedented increases in operating costs over the last two years with no let-up in sight. Input costs are continuing to rise right across all areas of business for hotels and guesthouses at a time when they are also dealing with a significant rise in interest rates.
Recent industry research reveals that hoteliers rank rising business costs as the most serious challenge facing their business this year, with early forecasts indicating further increases of in excess of 8% in operating costs over the year ahead, significantly outpacing levels of inflation within the wider economy.
