Rates on hotels 'strangling' business

THE SINGLE biggest issue facing the tourist industry is local authority rates, with hotels and guesthouses paying up to €3,000 per room regardless of occupancy, the Irish Hotels Federation annual conference was told yesterday.

Federation president Paul Gallagher said a promised review of rates in 88 local authorities had been completed in just three local authorities in the 10 years since the introduction of the Valuation Act.

He said hotels and guesthouses were paying an average of €1,500 per bedroom, which meant some rooms were operating at a loss. Rates paid by hotels and guesthouses ranged from about €75,000 per year in Co Longford to more than €26 million in Dublin. Despite the urgency of the situation, it would take a further decade to completely review the outstanding areas.

“Exorbitant rates are slowly strangling individual businesses, with local authorities ignoring the vast majority of attempts by distressed businesses to negotiate their bills,” Mr Gallagher said. The federation has published details of an industry survey that 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.

“The 2001 Act should be collapsed and new legislation introduced to expedite the revision process and ensure adequate resources are available to the Valuation Office to ensure all rateable properties in the country have their valuations revised very five years.”

The outgoing Government had acknowledged the system was flawed and intended to speed up the rates revaluation, said Mr Gallagher.“This recognised the inherent inequities in the rates system which sees hotels and guesthouses continue to subsidise other commercial ratepayers as local county and city managers bury their head on the issue.”

The incoming government should 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 seek 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 urging the government to undertake a review of the Commission for Energy Regulation to result in lower energy prices. It said last year’s energy levy has resulted in additional average costs of €7,000 per hotel.