VAT increases which have come into effect in the New Year will hit tour operators hard, Mr Jimmy Deenihan, Fine Gael spokesman on tourism, has said.
He has called for concessions for the tourism industry.
The new VAT levels, up by a percentage point to 13.5, must be absorbed by the operators, he said, unless there is a concession by the Government.
"Any business that is contracted should not be exposed to VAT increases," Mr Deenihan said.
In 1992 when VAT went up from 10 to 12.5 per cent, the Government allowed operators this kind of concession, Mr Deenihan said.
"In reality it's the Government, not the industry, that are hiking up prices in the tourism sector. Tourism is facing a very challenging in 2003. There is a lot of competition from other destinations and the dollar is weakening. This, together with the extra charges on rates, VAT and ESB and such is putting huge pressure on our attractiveness to the important, high- spending American market."
While there was a new trend in the US for late bookings, coach tour business was still booked well in advance.
Operators will either have to go back to the customer or absorb the increases themselves, Mr John Healy, president of the Irish Tour Operators Association (ITOA), said. The ITOA has partners in the overseas markets, who will have brochures on the shelves at last year's VAT rates.
"VAT is a sales tax. It is the end user who should absorb it. This time, though, it is the tour operators who will have to absorb it," Mr Healy said.
Tour operator business from the US was down by up to 25 per cent in some quarters, European business was flat and had seen no growth, he said. The ITOA would continue to fight for a concession, he said.