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Hotels in Urgent Call to Government Seeking Emergency Tourism Budget

08/02/2021

The latest survey from the Irish Hotels Federation (IHF) reveals a €2.6 billion drop in hotel and guesthouse revenues during 2020 compared to the previous year, representing an unprecedented financial hit to the sector. Down 60% year on year, the collapse in revenues due to Covid restrictions has affected all areas of hotel operations – from accommodation, food and beverage to corporate events and social gatherings.

Results show a dramatic decline in room occupancy levels for the sector, plummeting to a record low of just 30% last year compared to 73% in 2019 as a result of severe restrictions and an obliteration of overseas tourism into the country. With significant Government restrictions set to remain in place for the first of half of 2021 and beyond, the sector continues to face enormous financial challenges and uncertainty. Urgent additional Government supports are required if tourism businesses are to survive.

The IHF is calling on the Government to put in place an Emergency Tourism Budget with additional targeted measures to ensure the viability of tourism businesses and the hundreds of thousands of livelihoods they support throughout the country.

Tim Fenn, Chief Executive of the IHF stated: “We have experienced nothing short of a catastrophic financial shock, with risks of a prolonged and devastating impact on our industry and the ability of tourism businesses to survive and recover. Government supports so far have been piecemeal and fallen far short of what is required given the extended restrictions and economic damage facing our sector.”

Emergency Tourism Budget
“The Government must come forward with a more coherent, sector-specific programme of supports and measures to secure the long-term financial sustainability of hotels and guesthouses. We are calling for decisive Government action in the form of an Emergency Tourism Budget to include substantial increases in payments to tourism businesses under the Covid Restrictions Supports Scheme (CRSS), enhanced employment subsidies, extension of the local authority rates waiver until the end this year and a further six-month moratorium on bank term loans to support cashflow.

“We also calling for a clear commitment from the Government to retain the 9% tourism VAT rate to assist recovery and secure a viable and sustainable future for our industry. Tourism businesses such as hotels are now contracting for international business up to two years out in an exceptionally competitive market with one hand tied behind their back. As yet, they have no pricing certainty in relation retention of this critically important VAT measure and this must urgently be addressed.”

“It is critical that we get certainty around supports for business recovery. We cannot afford any delay if businesses are to have a fighting chance of getting back on their feet this year. A severely devastated hotels sector would be a major loss to Ireland’s economy and society for many years to come. This can and must be avoided.”
Five Urgent Measures Required from Government:

Covid Restrictions Supports Scheme (CRSS): Targeting businesses with 75% drop in revenue, doubling of payment amounts irrespective of level of Covid restrictions as well as removal of the current €5,000 weekly cap
Employment Wage Subsidy Scheme (EWSS): Extension of the scheme up until the end of 2021 to enable tourism businesses retain staff.
Local Authority Rates: Extension of waiver for tourism businesses until end of 2021. 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.
Liquidity Measures – Further six-month moratorium on bank term loans to support cash flow. Additional mortgage deferment for employees impacted by the crisis.
9% VAT – Clear commitment re retain 9% tourism VAT at least up until 2025 to assist recovery and provide certainty for tourism businesses.

As Ireland’s largest indigenous employer, tourism has been hardest hit by Covid restrictions. Prior to Covid, tourism businesses supported 270,000 livelihoods – one in ten of all Irish jobs. An estimated 160,000 tourism jobs have now been lost since March last year, and the Government’s priority must be to ensure everything possible is done to recover these jobs.

“These jobs matter – not only to the people working within the industry but also to the wider economy, especially the many parts of regional Ireland where tourism is the only show in town. A failure to support the industry now will have ramifications for the future of Ireland’s tourism offering and for the economy that could take decades to recover fully,” adds Mr Fenn.

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