The Importance of the 9% VAT incentive.
Trending represents statistics from over 70 hotels and includes hotels in Cork, Limerick, Galway, Dublin, Waterford and Kilkenny.
The Irish hotel market has achieved incredible growth with the vat incentive of 9%. The lower vat has yielded significant revenue growth which has resulted in a larger employment pool which ultimately has provided a significant increased tax take.
Another contribution to government tax revenue largely missed is the indirect taxes that hotels contribute in the form of council rates. Hotels that are located in city center locations are liable at the highest rateable charge. Also for service providers like Trending, there are a lot of service company’s surviving and thriving from the hospitality Industry.
So what are the growth levels for hotels?
2017 Occ % ARR RevPAR
Cork 1.7% 11.1% 13.6%
Limerick 2.2% 9.6% 13.2%
Galway 1.8% 5.1% 7.6%
National 1.6% 8.4% 10.8%
After 6 months of 2018
2018 Occ % ARR RevPAR
Cork 2.6% 11% 14.8%
Limerick 0.4% 8.6% 9.3%
Galway 0.8% 8.2% 9.4%
National 1.1% 9% 10.7%
2017 ended with a national occupancy of 77.1%. Due to very limited changes in supply over the last 10 years there has been a very strong rate increase perhaps greater than expected, in some way due to some fantastic initiatives like the Wild Atlantic Way.
At Trending we would feel that any change on the vat rate would have a negative impact on hotels at a time when they are now going to be dealing with a significant increase in competition.
Lower taxes have always increased the overall tax take – Hospitality has been no exception to this economic principle.