Hoteliers to hold crisis meeting over industry difficulties

HOTEL OWNERS will hold a crisis meeting in Dublin today, where they are expected to call on the Government to introduce tax measures that allow for the closure of failing hotels without incurring a clawback on earlier tax incentives.

Up to 1,000 members of the Irish Hotels Federation (IHF) will attend the meeting at the Grand Hotel in Malahide this morning, where they will discuss what they say are unprecedented difficulties that threaten the survival of many businesses.

The IHF believes that, without Government intervention, the situation will have “immediate and devastating implications”.

The problems faced by the sector include the phenomenon whereby hotels that have fallen under the control of banks are operating at below-cost prices, which the IHF says is distorting the market with unfair competition.

The federation is concerned the National Asset Management Agency (Nama) could introduce further market “distortions” when hotel assets transfer to its control. Measures designed to avoid potential distortions were among the proposals submitted by the IHF to the Government last month.

“The hotel industry is in a serious crisis situation and unless there is urgent State intervention, the long-term viability of many enterprises in the industry will be seriously undermined,” IHF chief executive John Power wrote in a letter to Minister for Finance Brian Lenihan.

The IHF is seeking Government assistance in the “orderly” reduction of hotel capacity, whereby hotels could close their doors without suffering a clawback on tax incentives.

Tax incentives during the property boom encouraged the building of a glut of hotels, which helped facilitate growth in tourism revenues. But the operating profits of many hotels have been wiped out, due largely to the decline in tourism, which is not expected to return to peak levels for several years.

However, the IHF also believes new tax incentives should be introduced to support equity investment in existing hotel businesses.

The hoteliers are also expected to discuss the cost of the minimum wage and “excessive” public-sector charges, as well as the unavailability of bank credit.