The Irish Hotels Federation (IHF) today responded to the Central Statistic Office price index figures for June, stating it made good economic sense for the Government to accelerate its commitment to driving down costs of doing business in Ireland. As these are reduced they would positively feed through to consumers and that every action to assist this process should be undertaken swiftly. Mr John Power, Chief Executive was particularly referring to cost items such as insurance, local authority charges, energy and wage increases.

"Due to it being a labour intensive services business, the inflation rate for café, restaurant and hotels throughout the EU is a multiple of the underlying rate of inflation. On average the rate of inflation in this sector throughout the EU is 1.72 times the overall inflation rate, while in Ireland the multiple is 1.62," says John Power.

"Insurance cost increases of 30%, energy 18%, local authority charges 30%, wages 7-10% together with the incredulous addition of a 1% increase in the rate of VAT in the last budget are the drivers of the level of inflation in the hotel sector," he continues.

"Due to market conditions and the high cost of doing business in Ireland, there is a no profitability in most of the hotel sector at present. This is notwithstanding that the quality and price of our accommodation product competes with, and exceeds the standards available in most countries with whom we compete."

"You have only to look at the special notices section of our daily newspapers to see the exceptional value available in a whole range of hotels and guesthouses in Ireland and examples being the Gresham Hotel in Dublin which is offering two nights bed and breakfast and one dinner for €129 per person sharing; the Kilkenny Ormond Hotel, with two nights bed and breakfast, one dinner and a bottle of wine for €145 per person sharing. Or rooms in the Great Southern Hotels in Cork for €49, Jurys Inn in Limerick for €49 or Bewleys Hotel in Ballsbridge for €89."

Mr Power stated that the IHF reiterates what An Tanaiste, Mary Harney said today that if people are not happy with the value they are getting, they should shop around. There has never been such choice of great value available in Irish hotels and guesthouse as there is this year.

Mr Power stressed that hotels provide a service and an experience to their customers, and are not retailers of a commodity. "60-70% of any gross margin goes directly to pay the wages of the staff who deliver that service. Hotels are not in the same category as retail shops, which make their profits on the margins between the cost of goods and the sale price, and which, by comparison with hotels have a relatively low labour cost."

ENDS

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