4.30pm Update Statement: Wednesday, 12th August 2009

Crippling local authority rates emerged as a key issue causing severe hardship for hoteliers at the Irish Hotels Federation’s crisis meeting today in Dublin. Members expressed outrage at the exorbitant rates imposed and that, due to their inability to pay in the current climate, an emergency provision should be brought in to immediately reduce rates by 30 per cent across the country for hotels and guesthouses. This would be in line with the recent result of the revaluation of hotels and guesthouses in the South Dublin County Council area completed the Valuation Office.

Hoteliers at the meeting condemned as outrageous the extortionate levels of local authority rates paid by hoteliers. The IHF bases the reduction on the fact that the revaluation carried out by the Valuation Office of all commercial premises in the South Dublin County area resulted in a reduction of approximately 30% in the local authority rates liability of hotels and guesthouse. Therefore, this level of reduction should be applied across all local authority areas until the revaluation process is completed in each local authority area throughout the country.

According to the Matthew Ryan, President, IHF, hotels and guesthouses are disproportionately subsidising the rates liability of other business premises to the tune of at least €30 million euro each year. Hotels and guesthouses are being penalised by an antiquated taxation system of commercial rates that sees local authorities extract taxes relative to the size of premises without any recourse to the level of turnover or overheads of the business.

”Our members have been paying rate increases year on year without recourse to independent assessments. We have been asking too long for this issue to be addressed, and it hasn’t been addressed. Excessive local authority rates are having a devastating effect on hotels which are already struggling to deal with decimated revenues and cost bases that have not yet adjusted to the changed economic reality on the ground. Our members are willing to pay a fair and equitable level but simply can no longer bear the current rates that are imposed in this unprecedented environment when a re-evaluation process should be completed,” says Mr Ryan.

“We are calling for the introduction emergency provisions to allow for a country-wide 30% reduction in Local Authority rates applicable to hotels and guesthouses until such time as these properties have been revalued as provided for in the Valuation Act 2001 Act. Only one local authority area in the entire country has completed this process in seven years – we can no longer wait for the Valuation Office to complete this countrywide process given the dire circumstances our members are facing. Some of our members are experiencing a total disregard by local authorities to the current operating and fiscal environment – an emergency provision for this reduction is fair and might result in Local Authorities seeking to comply with the Valuation Act 2001.”

Among the other issues discussed at today’s meeting were:

• Need to manage the substantial excess capacity that exist in the sector
• Distortion of the market with unfair competition as a result of hotels under the control of the banks operating at below cost prices;
• Severe difficulties faced by hotels and guesthouses in obtain adequate bank credit to survive through the recession;
• Need for the cost base of hotels to adjust to the worsened market conditions;
• Excessive public sector charges to which hotels are subjected;
• Potential for NAMA operations to introduce market distortions and unfair competition

ENDS

FOR INFORMATION:

Siobhan Molloy / Eoin Quinn Tel: 01 6760168
Weber Shandwick Mobile: 086 817 5066 / 087 233 2191