Budget 2017: Dalata: Time to make 9% Vat rate permanent

From the perspective of the hotel industry, I am pleased that the 9% Vat rate has been retained. I have said on many occasions that I believe this should be made a permanent rate.
Budget 2017: Dalata: Time to make 9% Vat rate permanent

It was an enlightened move by the previous government that has led to the creation of thousands of jobs. It also keeps us in line with other European countries.

The uncertainty that arises each year about its retention is a negative influence for those considering developing new hotels.

Claims hotel rates are too high in Dublin do not stand up to any objective scrutiny. Smith Travel Research (STR) is the most recognised research company in the world for the hospitality industry, in terms of tracking average room rates in cities. It gets its data from a large number of hotels in each city who submit room revenue and occupancy statistics on a daily basis. For the first seven months of this year, STR had the average room rate in Dublin as being 11th highest out of a basket of 31 large cities in Europe.

Room rates may appear very high on busy nights when events are taking place, but this is normal in all major cities. The average room rate is the best measurement of how expensive or otherwise a city is, as it takes account of prices charged for all rooms in a hotel over the 365 days of the year. Using STR statistics, Dublin could not be considered expensive when compared to other European cities.

As regards the towns and cities outside of Dublin, there is excellent value with most locations still at room rates below 2008 levels.

The reduced Vat rate has helped revenues and profits get to levels where it now makes sense to build new hotels. There has been no net increase in the number of rooms in Dublin since 2008 because room rates were not at levels that could justify the investment cost of a new hotel.

Dalata will have between 900 and 1,000 new rooms open by the middle of 2018 on the island of Ireland. This will create over 400 jobs and represents an investment of over €110m in the economy. It is just one example of the benefits of the reduced Vat rate being invested back into the economy. From the perspective of the hospitality industry, this is a positive budget.

Dermot Crowley is deputy CEO of Dalata Hotel Group

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