Hotels and guesthouses have welcomed the range of measures and supports announced in Budget 2021 by Ministers Paschal Donohoe and Michael McGrath.
Irish Hotels Federation (IHF) South East branch chair Colm Neville welcomed in particular the extension of employment supports to the end of 2021 and the rates waiver scheme along with the reduction in the tourism VAT rate, which he said would help aid the recovery of the industry.
He said the new Covid Restriction Support Scheme, the Tourism Business Support Scheme and funds for tourism product development are welcome recognition of the challenges being faced by businesses.
"The extension of employment supports until the end of December 2021 is very welcome. However, we are disappointed that the rates of the Employment Wage Subsidy Scheme (EWSS) scheme were not increased. This does not recognise the challenges facing tourism and hospitality businesses in retaining key staff during the difficult winter/spring months and against the backdrop of additional restrictions," said Mr Neville.
“We also welcome the reduction in the tourism VAT to 9%, which is the right tourism VAT rate. It is an important measure that will stimulate demand and aid the recovery of the tourism and hospitality industry. After the last recession, tourism created the most jobs nationally - 90,000 new jobs - and there is no doubt that the 9% VAT rate contributed significantly to this increased employment."
Mr Neville said pre-Covid, the accounted for one in 10 jobs across the country, 70% of which were outside of Dublin. "Reducing the Tourism VAT will help sustain jobs and communities across Ireland," he said.
“As well as providing a stimulus in the Irish economy, the reduction will improve our competitiveness as an international tourism destination. However, it should be a permanent measure at a minimum of five years. Contracts with tour operators, for example, which can account for over 30% of many hotels’ business, are agreed two years in advance," Mr Neville continued.
"Before today, VAT on Irish hotels was the second highest in Europe and higher than 30 European countries. The UK – our nearest largest market and one of our biggest competitors - currently has a VAT rate of 5%, so today’s reduction is an important boost to our competitiveness.
Mr Neville cautiously welcome the extension of the local authority rates waiver period to December 31. " We look forward to engaging further with Government if, as expected, Covid restrictions are still in place at the end of the year. While every help is welcome, the time-period should coincide with business interruption due to Covid-19 and for a minimum of 12 months. After that, payment of local authority rates should be based on reduced levels of activity due to the crisis and until the industry has recovered. Businesses cannot be expected to pay rates on historical turnover figures that do not reflect the significantly lower levels of business that hoteliers are experiencing," he said.
Mr Neville also welcomed the announcement that the Government is to introduce a compensation scheme for businesses forced to close due to Government restrictions. “We welcome the recognition of the enormous hardship that these businesses face, including those in the tourism sector, and we look forward to seeing the full details," he said.
Additionally, he welcomed the €55 million allocated for a Tourism Business Support Scheme as well as the €5 million for tourism product development, highlighting the strong success of products including the Wild Atlantic Way in increasing domestic and overseas visitor numbers in recent years.
While welcoming the range of measures and supports, Mr Neville said that additional liquidity measures are still required to help fund hotels during the coming months as a result of the cash flow lost out due to Covid-19 restrictions. “We will continue to seek an extension of the moratorium on bank term loans from six months to 12 months. Government must continue to support us on finding the way forward on this as we feel it is a missed opportunity,” he concluded.