Monday, 7th March 2011

SCRAP VALUATION ACT - HOTELIERS CALL ON NEW GOVERNMENT
Survey: 8 out of 10 properties cite local authority rates as being as serious negative impact

The Irish Hotels Federation (IHF) today urged the incoming Government to throw out the Valuation Act 2001 and replace it with a more equitable piece of legislation for determining the levels of local authority rates charged to businesses. Paul Gallagher, President, IHF told delegates at its 73rd Annual Conference that hoteliers are exasperated by the Valuation Office’s inexcusable delays in revising the valuations of rateable properties in 85 of the country’s 88 rating areas.

Mr Gallagher states, “Exorbitant rates are slowly strangling individual businesses with local authorities ignoring the vast majority of attempts by distressed businesses to negotiate their bills.
Many of our members are being charged up to double the amount they would reasonably expect to pay if the revisions were completed as originally set out in the 2001 Act. Urgent intervention is now required to assist businesses who now have little confidence that the Valuation Office will complete the process within the next decade.”  

Mr Gallagher states that pre-election promises to provide real support to help struggling businesses should now be honoured. He called on the Government to address the excessive level of rates (totalling some €90 million annually) paid by hotels and guesthouses who have been waiting nine years for a rates revision under the Act to be addressed. In the meantime, he calls for an immediate 30% reduction in rates to be applied as an emergency provision.

In a survey released today at the IHF’s conference, 8 out of 10 hotels and guesthouses cited local authority rates as having a significant negative impact on their business. The majority of respondents indicated that rates were the single most significant negative factor impacting on their business – ahead of poor consumer confidence and people taking fewer holidays. Over a quarter of members had been issued with a six day notice demanding payment or threatening a visit from the sheriff in relation to rates over the past year.

In Ireland, the Valuation Office operating under the Valuation Act 2001 assesses the level of rates that local authorities can charge businesses. Prior to the enactment of the Act, 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. To date, only three of the 88 rating areas in the country have had revisions carried out by the office of the Commissioner of Valuation. According to Mr Gallagher, this reflects the inherent inefficiency and incompetence of the Valuation Office in failing to fulfil its remit.

“The 2001 Act should be collapsed and new legislation introduced to expedite the revision process and ensure adequate resources are available to the Valuations Office to ensure all rateable properties in the country have their valuations revised every five years. Where necessary this should involve the secondment of additional manpower to ensure the process is carried out efficiently and quickly,” states Mr Gallagher. “We’re willing to pay a fair and reasonable rate but not the excessive and disproportionate levies that are being currently applied in the absence of proper promised valuations, particularly when cashflows simply do not exist to meet these payments.”

The hotel and guesthouse sector represents 1.5 per cent of national GDP but is levied with 6 per cent of the country’s total rates bill. Hotels and guesthouses pay, on average, €1,500 per bedroom with some local authorities charging 2,500-3,000 per room. The country’s 900 hotels, encompassing 60,000 bedrooms, pay approximately €90 million a year to local authorities in rates - regardless of their trading circumstances.  Of the three rateable areas that have had a valuation carried out we have seen reductions of between 30-50% in rate bills.

Mr Gallagher states, “The outgoing Government acknowledged the current system was flawed and intended to speed up the rates revaluation. This recognised the inherent inequities in the rates system which sees hotels and guesthouses continue to subsidise other commercial rate payers as local County and City Managers bury their heads in the sand on the issue.”

FOR INFORMATION:
Siobhan Molloy/Eoin Quinn                         Tel: 01 6760168
Weber Shandwick                                           Mob: 086 817 50 66/087 233 2191