Tourism sector warned to keep prices in check

Minister warns that sector must not return to the high prices that damaged its competitiveness during the boom years

Minister for Transport, Tourism and Sport, Paschal Donohoe stressed that maintaining the low VAT measure for the tourism sector is conditional on the industry remaining competitive on Wednesday. (Photograph: Dara Mac Dónaill / The Irish Times)

Minister for Transport, Tourism and Sport, Paschal Donohoe stressed that maintaining the low VAT measure for the tourism sector is conditional on the industry remaining competitive on Wednesday. (Photograph: Dara Mac Dónaill / The Irish Times)

 

The Republic’s tourism industry must not return to the high prices that damaged its competitiveness during the boom years, the minister responsible for the sector warned on Wednesday.

The Government is keeping the special 9 per cent VAT rate for the hospitality industry under review, according to the Minister for Transport, Tourism and Sport, Paschal Donohoe.

It emerged recently that the measure, introduced in 2011 to restore competitiveness to the Republic’s tourism industry, is costing around € 640 million.

Mr Donohoe stressed that maintaining the measure is conditional on the industry remaining competitive.

“The pricing that we saw in 2005, 2006 and 2007 is not a target, that is not a target that should be returned to,” the minister warned.

Recent reports indicate that hotel room costs in central Dublin are hearding back to the levels they reached in 2007, when the tourism industry went into decline.

The minister said that he accepted that certain areas of the industry had to price up in order to re-invest and create jobs. However, he said that shuld only happen gradually.

Speaking after addressing the Centre for Aviation chief executives’ conference in Powerscourt Hotel in Wicklow, Mr Donohoe said that he could not say when the Government is likely to decide on a sale of the State’s 25.1 per cent shareholding in Aer Lingus.

International Consolidated Airlines’ Group has offered €1.36 billion to buy the Irish flag carrier.

The group has been in talks with the Government on a possible sale. Mr Donohoe said that those discussions are ongoing.

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