Hike in hospitality VAT rate branded ‘slap in the face’ for operators

An award-winning chef and hotel owner has slammed the Irish government’s budget plans to increase the hospitality VAT rate as “the single worst blow to the industry in years”.

The revenue-raising measure abolishing the 9% special hospitality VAT rate, and a return to 13.5% within the sector was announced as part of the 2019 budget on Tuesday.

The 9% rate was introduced in 2011 in an attempt to reduce some of the financial stresses on the hospitality sector during Ireland’s recession.

Brian McDermott, who opened Moville’s Foyle Hotel in Co Donegal just months ago, and has already won Newcomer of the Year 2019 says job losses are inevitable.

“It’s just shocking, we opened a hotel that had been closed for ten years after the recession, we’ve created 38 jobs, built an entire business plan around the VAT rate, and this is how we’re treated,” he said.

“We’re the newest player, and this is how we’re rewarded for that.

“Our model was to employ local staff, use local suppliers, all going towards the local economy.

“This is a roller coaster for jobs and positions, and it is unacceptable,

“I suppose now, we charged to try and reverse this because this means job losses without shadow of a doubt, this is not a knee jerk reaction,” he said.

The Foyle Hotel, located on Donegal’s Wild Atlantic Way is a wine bar, eatery and boutique hotel.

The 200 year-old building was refurbished and renovated after previous owners closed the hotel during Ireland’s post-2008 recession.

“We’re hit with this news 12 weeks after opening, where is the support from the government? This is how we’re rewarded, I’m responsible for these people’s jobs.

“An almost 50% increase, from 9 to 13.5, at a time when occupancy levels are down in hotel rooms outside of the major cities,” Mr McDermott added.

Critics of the new VAT rate have announced the hike will hit rural communities the hardest.

Independent TD for Kerry, Michael Healy-Rae was quick to criticise the plans, saying he was “disgusted and angry”, calling it a “slap in the face” to small and rural operators.

Mr McDermott echoed Mr Healy-Rae’s sentiments and suggested the government should have considered a city tax rather than a generic VAT hike across the country.

“It should have been a city tax increase, the government should think about the rural side of this, a VAT rate can’t be generic for a country.

“I was in Dublin last week, I couldn’t get a room, they were booked out and it was around 230 euro as an average price.

“In our case, we’re closed on Mondays because the business isn’t there, how can a VAT increase be standardised across the country?

“We can’t add this increase onto our customer, they’re not going to pay it.

“Tourism is what kept, and is keeping Ireland afloat, and this is how were treated.

“You can’t hide your reaction, what this has done to me as a business owner is obvious, and my staff are entitled to be worried, the impact will be felt in the next month ahead, this is the single worst blow the hospitality industry has had in years.”