CLARE’S leading hospitality providers believe the Government are moving too slowly in introducing supports for the sector.
The Government’s decision to reduce the VAT rate to nine per cent for ‘parts of the hospitality sector’ last week will be introduced later this year. The current VAT rate for the hospitality sector is 13.5%. Seán Kelly, MEP for Ireland South and Leader of Fine Gael in the European Parliament, said the new rate “will provide these businesses with the breathing space they desperately need to recover, grow, and thrive in a competitive market.”
However, speaking to local hospitality business owners, The Clare Echo received a mix of reactions to the news. Alan Flynn, owner of the Old Ground Hotel in Ennis, said, “We do welcome the reduction in VAT rates but we still feel the Government needs to go further in terms of prioritizing the hospitality industry.
“Recently, there has been an increase in minimum wage. The reduced VAT rates won’t even compensate for the increase in minimum wage. We have to deal with escalating costs such as heating, lighting, and electricity, which have seen no reduction in the last three years. Absolutely, the government has moved too slowly.
“I would have been much hap- pier if the change had happened before the dissolution of the last government. Any changes to VAT have to happen instantly. We cannot afford to wait until October for the new budget. Even with the year-round business we have here in Ennis, businesses are still struggling to stay open.”
Flynn also highlighted the importance of further support for the sector, stating, “We need an increase in marketing initiatives to bring people into the region. The Government has to look at commercial rates for the hospitality industry. We’ve faced a massive increase in rates in Ennis, and in the past two years, the rates have doubled. The Public Realm works have also slowed business in the area. We have been banging on doors for the last two years. There is no doubt in my mind that there were a huge amount of closures during that time. With the escalating costs, it’s just so hard for anyone to stay in business.”
Sean Lally, co-owner and director of Hotel Woodstock, said that hospitality in Clare has a bright future but that the Government needs to work with the sector.
“It is a very welcome move that the new government is looking at a 9% VAT rate on food-related businesses. It would greatly assist the many vulnerable food-led businesses that have faced an uncertain future and escalating cost challenges in recent years. This would be an important step toward putting these businesses on a more stable footing.”
Lally noted, “There are enormous opportunities for further develop- ment of tourism and hospitality as a major engine for growth and economic prosperity across the country. With the right policies and positive business environment, we believe tourism and hospitality have a bright future ahead.”
However, he stressed that the Government needs to go further:
“On average, the cost of doing business here is 42% higher than in other European countries, and that’s not where we want to be.
“We could also tap into the potential of wind and wave energy off the West Coast of Ireland. This could not only reduce energy costs for businesses but could also make us a net exporter of energy, offsetting potential threats to our corporation tax from foreign direct companies. It’s time to cut red tape and push these energy projects forward.”
Dermot Kelly, co-owner of Shannon Springs Hotel and the Temple Gate Hotel in Ennis, echoed a similar sentiment, saying, “We’d like to have the new VAT rates in place
now, but they say that it’s not possi- ble. We welcome any measures that will help cut our costs. A lot of food and beverage-led businesses are struggling now with costs constantly increasing. You want to offer a fair and value-led proposition to the customers, but you also want to stay open for business and stay afloat. It’s about finding that balance.” Kelly added, “The new VAT rates
are certainly a positive thing. At the moment, Ireland has the second-highest VAT rate in the EU, and 9% is certainly the correct rate for Ireland. It’ll make us more attractive to international tourists and businesses.”
