Leading hoteliers in Donegal have warned that jobs will be lost in the hospitality sector with an expected increase in the VAT rate combined with the effects of the uncertainty over Brexit.
Terry McEniff of Letterkenny’s Mount Errigal Hotel has warned that a “fear of the unknown” in the British market means potential overseas customers are just not spending.
Meanwhile, Deirdre McGlone of Harvey’s Point Hotel said a proposed VAT increase of 4.5 per cent will have serious implications for those in the industry here.
“To be perfectly honest we have only consolidated our reputation in the last few years as being a ‘good value’ destination on both the international and domestic markets,” she said.
“The implications are serious. We have been investing in our product both in marketing and physical terms and we now have to sit down and re-evaluate our plans.“We are now looking at a predicted 4.5 per cent increase in tax.
“Many people might think that hotels are going through boom times. Yes, we have enjoyed increased business but in the off season, there are many empty bedrooms in Donegal with a lot of fixed costs. The proposed VAT increase is yet another blow to rural Ireland.”
Terry McEniff said hotels here are facing a “double whammy” with the uncertainty caused by Brexit on top of the increase in VAT.
“Donegal is now the most exposed area in Europe, with Brexit only months away, as a destination that is highly dependent on business from both the UK and Northern Ireland.
“There is a great fear of the unknown in the UK market and it is just plain and simple, they are simply not spending.
“I am not being alarmist but I can see jobs being lost across the sector, particularly in rural Ireland.”
Mr. McEniff added, “I think that the Government should consider the introduction of a ‘City Tax’ on hotels where the demand far exceeds the supply and the yield per room is much greater.
“This is not unprecedented. It exists in the US and in most European capitals and I strongly feel that it would be a much better alternative to the blanket increase.
Forced to close
“Donegal hotels simply cannot afford it and many could be forced to close.”
“We have already lost wedding reservations because of the weakness in sterling and we are now looking at tax increases.
“With all due respect the demand far exceeds the supply in the city hotels, but in the winter many of our hotels are de-facto seasonal hotels. Their doors may be open but their rooms are empty.
He added: “We have finally established ourselves as a strong tourism destination. We do not want to go back to the old days. With Brexit in the melting pot now also, it clearly is a time for serious concern for many business groups here.”