Hotels squabble shines light on room for VAT hike

The Bottom Line: industry body downplays Hotels.com claim of room rate increases

Irish Hotels Federation president Stephen McNally said fewer than one in 10 room nights booked in Ireland is sold through Hotels.com. Photograph: Dara Mac Donaill

Irish Hotels Federation president Stephen McNally said fewer than one in 10 room nights booked in Ireland is sold through Hotels.com. Photograph: Dara Mac Donaill

Wed, Sep 3, 2014, 01:00

On Monday an unseemly spat broke out in the hotel sector about, of all things, the strength of the recovery in the industry.

It followed the publication of Hotels. com’s latest survey of room rates in Ireland. It found that prices had risen by an average of 10 per cent in the first half of this year.

Killarney, the Kerry town much loved by Americans, was the most expensive destination, up 4 per cent at €111 while Dublin was up 15 per cent at €107.

Limerick was the most affordable destination at €74 per night while the average rate across the board was €101 per night.

This survey is part of a wider review of hotel prices around the world by Hotels. com and is based on bookings made on its website.

The survey results had barely been circulated before the Irish Hotels Federation, which represents more than 1,000 hotels and guesthouses, had “rejected” the claims in a statement.

It said price increases nationally are actually running at just under 3.5 per cent based on statistics from the Central Statistics Office.

“Less than one out of every 10 room nights booked in Ireland is sold through this booking site,” said IHF president Stephen McNally, who is also deputy chief executive of Dalata, the biggest hotel operator here and the group behind the three-star Maldron brand.

“The vast majority are sold through other sources including directly with the hotel, over the phone or through the hotel’s own website. Hotels.com does not typically capture other categories of booking such as the key tour, conference and event market segments.”

The IHF went on to recommend that people “shop around and not rely on just one source when comparing accommodation prices”, adding that customers should make sure to check “hotels’ own websites where prices are often better and promotional rates may be available”.

Ouch.

The undertone was that this was nothing more than a cheap publicity stunt by Hotels.com, a company that can earn a commission of up to 25 per cent if it sells a hotel bedroom here, something that rankles with many accommodation owners.

There is another reason why the IHF came out so strongly against the findings.

We’re firmly on the run-in to the next budget (October 14th) and the IHF is keen to ensure the reduced VAT rate of 9 per cent that has applied to a number of categories of business since July 2011, including hotel lettings and the supply of food and drink, remains in place.

Lobbying efforts

A report flagging that hotel room rates are rising by 10 per cent a year isn’t exactly helpful to its lobbying efforts.

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