Tuesday, 2nd March 2010

LOCAL AUTHORITY RATES TIGHTENING THE NOOSE ON VIABLE HOTELS
Hotel Chief Calls for Immediate Inability to Pay Provision for Hotels and Guesthouses

Local authority rates imposed on hotels and guesthouses are crippling an industry already under massive pressure, the newly elected President of the Irish Hotels Federation, Paul Gallagher told delegates at its AGM today. Mr Gallagher stated that a survey of its members revealed that local authority rates is the most pressing issue affecting the viability of hotels and guesthouses in the current credit- and cash-strapped environment,  with 87 per cent of respondents indicating that rates are having a significant negative impact on their businesses. Over €80 million every year is squeezed out of the hotel and guesthouse industry in local authority rates which are set by individual local authorities without recall to any independent evaluation. The IHF today called on the Government to establish an ‘inability to pay’ emergency provision and a 30% reduction across the rates nationwide for the sector, to save viable hotel and guesthouse business which are going to the wall.

“Local authorities are literally getting away with robbery at the moment.  Under the law since 2001, the Valuation Office are supposed to be carrying out  a revision of the rateable valuation of every rateable property in the country and to date only two local authorities in the entire country have completed this process.  At this rate it will take another 20 years to complete the process notwithstanding that the legislation envisaged even the revised valuations being further revised after every 5-10 years.  In both local authority areas in which the revisions were carried out, the hotel sector benefited from an average of 30% reduction in their rates,” says Mr Gallagher.

Mr Gallagher said that the harsh reality is that our businesses are trying to survive whilst local authorities are cushioned from the realities of our struggling economy.  “Hoteliers are confronting these inequitable charges on a daily basis and there is no doubt they are causing serious hardship. We are willing to pay a fair rate but the delays in the revisions are too long. Our patience is gone. We need Government intervention immediately and specifically the Ministers for Finance and the Environment to intercede now before further damage is done to our sector.”

Hoteliers at the IHF AGM vocally condemned the rates situation ‘as outrageous and extortionate’ more especially when the rates are only one aspect of the monies secured from the sector.  Other ‘hidden’ charges that are imposed include water rates; grease traps; waste charges; development levies etc.   

Mr Gallagher welcomed the fact there was acknowledgement by the Minister for Finance in Budget 2010 that a ‘Bord Snip’ type approach was needed to radically improve the efficiencies of local authorities but condemned the continued lack of Government action on the rates issue.

“Hotels and guesthouses continue to disproportionately subsidise the rates liability of other business premises to the tune of at least €30 million each year. They are being penalised by an antiquated taxation system of commercial rates that sees local authorities extract taxes without any   up to date reference to the level of profitability, turnover or overheads of the business. It is not only eroding competitiveness but is pushing hotels nearer and nearer to being able to survive.  Our sector can no longer continue to be a soft money pot for the local authorities to keep dipping into. Reform is need soon and in the meantime an inability to pay and a uniform 30% reduction in rates must be enacted,” Mr Gallagher continues. “An emergency provision might compel The Valuation Office to quickly complete the national revision of valuations as provided for in the Valuation Act 2001.”

The IHF stresses that in the UK, there is a revision of rateable valuations carried out every five years on a nationwide basis. This ensures that the rateable valuations of premises are more in line with current market conditions. It maintains that Ireland should have a similar process and there is no excuse for the delays being experienced. 

Top five and bottom five Counties rate charges on hotel sector (2008):

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