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9% Tourism VAT Rate Assisting Hotels Take on More Staff over Next 12 Months

  • 94% of hotels and guesthouses indicate a positive outlook for trading conditions
  • 84% seeing an increase in business compared with this time last year
  • 70% of hoteliers plan to take on additional staff over next 12 months


    Monday 23rd February 2015: Irish hoteliers are more optimistic about the outlook for the tourism industry according to an industry survey* undertaken by the Irish Hotels Federation (IHF) in advance of its 77th Annual Conference being held in the Slieve Russell Hotel. Overall confidence levels are up on last year, with 94% of respondents indicating a positive outlook for trading conditions for their business over the next twelve months. As a result, seven out of every ten hotels (70%) plan to take on additional staff over the next 12 months.   


    Nationally, 84% of hoteliers are seeing an increase in business levels compared to this time last year and advance bookings for the remainder of the year are also performing strongly with 75% seeing an increase on 2014. Of those premises catering for corporate meetings and events, 63% are seeing an increase in this area of their business in line with increased business activity across the general economy.  


    IHF President Stephen McNally says: "With two years of strong tourism growth now under our belt, the benefits are beginning to be felt outside the traditional tourism hotspots. We're seeing an upturn across most rural areas – which is very welcome. There is a long road ahead, however, particularly for regions such as the North West, East and Midlands where occupancy levels continue to lag at only 54% compared to a national average of 64%." 


    Mr McNally states that the 9% VAT rate continues to provide enormous support to the industry when marketing Ireland abroad as a tourism destination. Combined with increased air access and the reduction of the air travel tax to zero, the measure is enabling Ireland to achieve impressive growth in overseas visitor numbers. This is directly feeding into increased confidence on the ground with 89% of hoteliers planning to invest in refurbishment and product development this year and 71% planning to increase their investment in marketing.


    However, Mr McNally notes that a significant number of hotels will not achieve profitability in 2015. He says: "Much of the sector continues to operate from a low revenue base following the recession which means the high cost of servicing overhanging debt remains a serious challenge. This is weighing heavily on many hotels with some 34% saying they remain concerned about the viability of their business – notwithstanding the upturn in Irish tourism."



  • Business costs: The cost of doing business in Ireland remains a major challenge, with hoteliers citing excessive local authority rates as the single most pressing issue stifling cost competitiveness within the sector.  This is followed by high labour costs, utility costs and subdued consumer confidence.


  • Overhanging debt: Total hotel indebtedness is estimated at €5.3bn, with up to €1.4bn required in restructuring to bring hotel debt to a sustainable level.** The cost of servicing the interest alone means many hotels will not break even in 2015.


  • Skills shortage: Hoteliers continue to face a significant skills shortage in the sector with 83% of respondents citing difficulties hiring trained workers to fill craft and entry level positions within their businesses over the past 12 months.


Breakdown across Markets

  • Island of Ireland: Compared to 2014, business levels are up in the domestic market with 73% of respondents seeing an increase in business from the island of Ireland in the first couple of months of 2015. This contrasts with 20% who are experiencing static business levels and 7% who are seeing a decrease in business from the domestic market. 


  • Britain and the US: Some 55% of respondents are seeing an increase in bednights from Britain so far this year while 38% see no change and 7% see a decrease. Respondents are also positive about the US market with 43% seeing an increase in business (46% see no change; 11% see a decrease).


  • Germany and France: Results indicate mixed performances so far this year for both Germany and France, Ireland's two biggest markets in continental Europe. Compared with this time last year, 26% of respondents noting an increase in bednights from Germany (66% see no change; 9% see a decrease) while 18% are seeing an increase from France (72% see no change; 10% see a decrease).





Eoin Quinn / Siobhan Molloy                       Dublin office: 01 6798600

Weber Shandwick                                           Mobile: 087 233 2191 / 086 817 50 66



*Survey based on responses owners and general managers of hotel and guesthouse businesses across the country and conducted during February 2015.


**Hotel Sector Report 'The Next Steps' by economist Professor Alan Ahearne - June 2014


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