BusinessCantillon

Hotels have run out of road on the 9% VAT rate

CBRE report this week said daily hotel rates in Dublin reached a new high in May of €209 per night

The Taylor Swift saga and a new survey pointing to record room rates do not show a sector in need of a preferential VAT rate. Photograph: iStock

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Cantillon
Sun Jul 9 2023 - 07:00

Earlier this week, RTÉ’s Liveline radio show was inundated with calls from angry listeners telling their stories of having hotel bookings for the Taylor Swift concerts in Dublin in late June 2024, booked via third-party platforms, mysteriously cancelled by the accommodation providers.

Technical glitches were blamed, resulting in rooms being overbooked. It was a lame excuse and a bad look for the sector.

On Thursday, a report from real estate agent CBRE said the daily hotel room rate hit a new high in Dublin in May this year at €209 – 3.5 per cent higher than the previous high in September 2022. While the survey might not capture the entire sector, it gave oxygen to the claim from many quarters that the sector is price gouging. And this is a sector, remember, that is enjoying the benefit of a reduced VAT rate of 9 per cent.

We should get a better sense of where prices are at next month when Dalata, the biggest hotel chain in the State, reports it half-year results.

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Coincidentally, Cantillon received a promotional email in recent days from the Aer Lingus vacation store, which is targeted at residents in the United States. Among the offers for those living on the other side of the Atlantic was a six-night trip to Ireland that included return flights in economy seats, car hire for the duration, and accommodation in Cavan, Roscommon, Donegal and the “Dublin area”, which was actually the Dunboyne Castle Hotel in Co Meath. All for $899 (€820), which is remarkable value even if there is a lot of moving around and breakfast on only one morning.

So not everyone is being gouged. Nonetheless, the special VAT rate should go when the latest extension of it expires on August 31st. It won’t bring down prices but the industry can’t be rewarded by the Government for some of the bad practice that is taking place.

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