Hotel body welcomes travel tax move

Proposals by the incoming Government to abolish the €3 travel tax - subject to a deal being done with the major airlines - have been welcomed by the Irish Hotels Federation.

Proposals to scrap the tax contained in the Fine Gael-Labour programme for government are dependent on carriers Ryanair and Aer Lingus reopening closed routes and bringing more tourists into Ireland.

The incoming government warned last night that there would be no reduction if no deal can be done.

Speaking at the opening of the Irish Hotels Federation annual conference in Co Cavan this morning, federation president Paul Gallagher said while the move was a welcome initiative, the Government also needs to expand the number of carriers bringing tourists into Ireland.

Mr Gallagher told some 400 hoteliers meeting in Ballyconnell the current "quasi-duopoly" between Aer Lingus and Ryanair was "not good" for the hotel industry. He said efforts must be made to encourage carriers from France, Germany and Britain to come here, remarking "we have no Easy Jet, we have no Flybe and no German Wings. These carriers don't come here".

But while the problems in the industry including cost competitiveness, banking support and the issue of over capacity, all need to be addressed, Mr Gallagher said there were reasons to be optimistic, remarking "the glass is not half empty, it is half full".

He said recent success on the cricket pitch, the visit in May of England's Queen Elizabeth and the potential visit of US president Barack Obama, combined with the possible abolition of travel tax were all very positive signs for the year ahead.

Mr Gallagher also called for the abolition of Valuation Act 2001 which had promised a review of all rateable properties, across 88 local authority rateable areas.

Hotels and guesthouses pay an average €1,500 per bedroom with some local authorities charging €2,500 to €3,000 per bedroom, he said. Mr Gallagher said the industry paid about €90 million per year in commercial rates.

But despite the urgency of the situation over the 10 years since the Valuation Act became law just three of the 88 local authority rateable areas had completed their reviews and it would not take a further decade to complete the outstanding areas.

Mr Gallagher said "exorbitant rates are slowly strangling individual businesses with local authorities ignoring the vast majority of attempts by distressed businesses to negotiate their bills".

The federation has published details of an industry survey which show local authority rates and wage-and-utility costs are the most pressing issues affecting the business.

"Prior to the enactment of the Valuation Act businesses could seek a revision of the rateable valuations on a number of grounds including a deterioration in the profitability of the business" said Mr Gallagher.

The hotels federation also said it wanted the incoming Government to foster a new "pro-business 'can do' approach" which it said could deliver 20,000 new jobs by 2015.

But it said the incoming government would have to establish a "reconstruction and development bank" or a special banking division within one of the State-controlled banks to address the sector's problems in getting credit from the banks.

Hoteliers see a guarantee scheme similar to that in operation in the UK, where at least 50 per cent of qualifying loans to viable businesses are guaranteed, as being a potential solution to the credit squeeze. Borrowers would pay a premium of about 2 per cent to support the scheme.

The federation is also urging the new government to undertake a review of the Commission for Energy Regulation to result in lower energy prices. The Federation said last year's energy levy has resulted in additional average costs of €7,000 per hotel.