EXORBITANT LOCAL AUTHORITY RATES STRANGLING HOTELS
IHF TELLS JOINT OIREACHTAS COMMITTEE

82% of Hotels Say They Will Be Forced To Reduce Jobs Further

21st September 2010


82% of member hotels surveyed by the Irish Hotels Federation state that they will be forced to further reduce job numbers over the next three months due to their critical financial position according to Tim Fenn, Chief Executive of the IHF speaking to the Joint Oireachtas Committee on Environment, Heritage and Local Government.  Mr Fenn stated that the combination of excess capacity, falling demand, falling room rates, the collapse of the banking industry and the issue of competitiveness has brought the hotel sector to its knees.
 

“Over the last three years, hotels have addressed competitiveness in a commercial manner and reduced costs to the bone,” said Tim Fenn.  “The one area in which there has been an inability to reduce costs is Government-related charges and, in particular, local authority rates and charges such as water and sewage. We once again call on the Minister for the Environment, Heritage, and Local Government to substantially reduce the burden of local authority rates on hotels and guesthouses.”  

The 900 hotels in Ireland encompassing 60,000 bedrooms pay approximately €90 million a year to local authorities in rates.  This equates to an average of €1,500 per bedroom and, in many cases, can go up as high as €2,500 - €3,000 per room.  It is of great concern that, at a time when the live register is at 455,000, hoteliers are being forced to make decisions to reduce the level of employment and service in this important export industry in order to pay the exorbitant amounts demanded in local authority rates.

The biggest single cost over which hoteliers and guesthouse owners have no control is local authority rates. Prior to the enactment of The Valuation Act 2001, businesses could seek a revision of their rateable valuations on a number of grounds including a deterioration in the profitability of the business. The 2001 Act removed this method of seeking relief on the basis that the legislation envisaged that every rateable property in the country would have its valuation revised every five to ten years.

It is now nine years since the 2001 Act came into force and only three of the 88 rating areas in the country have had the revisions carried out by the office of the Commissioner of Valuation. At this rate, it will take over twenty years to complete the process in all rateable areas notwithstanding the intention in the legislation that the revised valuations would be further revised every five to ten years.

The revisions that have been completed have resulted in the local authority rates liability of hotels being reduced by on average more than 30%.  Based on this experience, it is reasonable to suggest that if the revisions were completed in the remainder of the country similar results would be achieved.

It is now the view of the Federation that the only option is for the Government to introduce emergency provisions providing a 30% reduction in Local Authority rates applicable to hotels and guesthouses until such time as these properties have had their rateable valuations revised as provided for in the 2001 Act. The slow progress by the office of the Commissioner of Valuation in carrying out revisions has rendered the 2001 Act manifestly unfair.  

“This is an emergency issue for most hoteliers and guesthouse owners as they just do not have the trading income or cash flow to pay the current level of local authority rates,” said Tim Fenn.

ENDS

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