HOTELIERS WELCOME BUDGET 2021 MEASURES
- Extension of employment supports welcomed; disappointment at no change in EWSS rates
- 9% VAT is right rate and will stimulate demand and aid recovery
- Welcome Tourism Business Support Scheme and funds for tourism product development
Hotels and guesthouses across the country have welcomed the range of measures and supports announced today by Ministers Paschal Donohoe and Michael McGrath. Irish Hotels Federation (IHF) President, Elaina Fitzgerald Kane, 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 she said would help aid the recovery of the industry. She 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.
Ms Fitzgerald Kane commented: “The extension of employment supports until the end of December 2021 is very welcome. However, we are disappointed that the rates of the 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.
“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 - 90,000 new jobs - and there is no doubt that the 9% VAT rate contributed significantly to this increased employment. Pre-Covid, our industry supported almost 270,000 livelihoods, one in ten jobs across the country, 70% of which were outside of Dublin. Reducing the Tourism VAT will help sustain jobs and communities across Ireland.
Ms Fitzgerald Kane added: “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. 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 - for example, currently has a VAT rate of 5% so today’s reduction is an important boost to our competitiveness.
“We cautiously welcome the extension of the local authority rates waiver period to 31st December 2020 and 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.
Ms Fitzgerald Kane 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.” Additionally, she 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, the IHF President 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 6 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,” Ms Fitzgerald Kane concluded.