Welcome to the Quarter 4 issue of our Hotel, Tourism and Leisure Sector Review.
In this issue we examine the potential impact of the planned VAT increase, market trends for demand, RevPAR, Visitor Numbers and the Transactional and Insolvency market.
For further information on any of the topics covered in this Review, please contact any member of our team.
9% Tourism VAT Rate
A primary concern for the tourism sector is the increase in VAT from 9% to 13.5% which is due to come into effect from 2014. All industry groups are lobbying for an extension of the 9% rate in October’s budget.
An increase in the VAT rate will have a significant impact on hoteliers unless they can pass the cost on to customers. In certain cases rates will have already been agreed for 2014 (such as for weddings, tours and conferences) and it will not be possible to pass on the increase.
The reduced VAT rate applies to approximately 75% of a typical hotel’s turnover. If the VAT increase proceeds as planned and price increases are not passed on to customers, the adverse impact to EBITDA for 2014 could be as much as 25% or €1,500 per available room.
A recent survey carried out by the Irish Hotel Federation (IHF) stresses that 99% of hoteliers feel the reduced tourism VAT rate has had a positive impact on their business with an increase in tourism jobs and competitive pricing.