Hotel and guesthouse owners in Donegal and across the country are calling on the Government to avoid introducing measures in this autumn’s budget which could damage the tourism industry.
Tourism is one of Ireland’s largest indigenous industries, supporting approximately 235,000 jobs.
Hoteliers warn that while the industry has made great strides in recovery in recent years, this growth cannot be taken for granted.
The Irish Hotels Federation, which represents almost 1,000 hotel and guesthouse across the country, is calling on the Government to maintain the 9% VAT rate in the forthcoming budget.
The Federation says it is one of the key components to the recovery in tourism in recent years and continues to support jobs in the sector and encourage reinvestment.
Paul Diver, Chair of the Donegal branch of the Irish Hotels Federation says the 9% VAT rate has been shown to be the right rate for the sector, bringing Ireland more closely in line with tourism VAT rates in other competing European countries and enabling Irish tourism to become more competitive.
Mr Diver said: “Its positive impact has exceeded expectations. Over 65,000 new jobs have been created across every town and county since 2011, making the 9% VAT rate one of the most successful job-creation initiatives in modern times.
“Here in Donegal our local tourism sector now supports 7,500 jobs and contributes some €213m to the local economy.”
While the sector has achieved a return to growth, Mr Diver says that there is no room for complacency with the tourism sector facing enormous difficulties due to the uncertainty around Brexit and the fall in the value of sterling.
“Our industry is heavily dependent on the economic environment of our major source markets, and we are very vulnerable to external economic shocks," he explained.
“We have already seen a negative impact from Brexit, with visitor numbers from Great Britain down significantly since the Brexit vote in 2016.
“The drop has been even more pronounced for Donegal and this market remains a difficult challenge for us. We have also seen weaker than expected business levels from Northern Ireland.”
Mr Diver continued: “At a time of serious economic uncertainty around Brexit, it is therefore absolutely incredible to suggest that the Government should undermine the sector and impose hundreds of millions in additional taxes on visitors, and make us less attractive.
“Government cannot influence the economic conditions affecting other countries but policy measures that can enhance competitiveness are within their control.
“The 9% VAT rate has been hugely significant in underpinning the recovery of the tourism sector. Any increases in taxes on tourists now would make a very fragile situation worse by making us less competitive and attractive as a destination.”
The adverse effects would be felt across the tourism industry according to Mr Diver with regional areas, especially those that are heavily reliant on seasonal and UK markets, being hardest hit.
“The strong growth achieved in recent years illustrates the economic and job creation potential of our industry at a national and local level.
“Tourism now generates €2 billion in taxes for the exchequer each year while every euro spent in tourism an additional €1.16 is spent in the wider economy, reaching into every town and village.
“Our industry is on track to creating a further 40,000 jobs nationally over the next five years, but only if the right economic environment exists, and that includes retaining the 9% VAT rate.
“Tourism growth is also allowing hoteliers across Donegal to re-invest revenues in refurbishment, renovation, product development and innovation.”
Mr Diver says this much needed investment is critical for improving competitiveness and is an essential element of the sector’s response to the direct and indirect challenges of Brexit.
“We should be focusing on ensuring that the right conditions are in place so that tourism in Donegal and across the country can deliver long-term sustainable growth and further employment generation,” he said.
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