HOTELIERS CALL ON GOVERNMENT TO TACKLE PUBLIC SECTOR CHARGES
Local Authority Rates a Serious Concern for Irish Hoteliers
· Hoteliers calls for a 30% reduction in local authority rates
· Greater efficiencies needed at local Government level
· National competitiveness strategy needed for all public sector charges
Monday 23rd February 2015: Excessive local authority rates remain one of the most pressing issues facing hoteliers according to an industry survey* carried out by the Irish Hotels Federation (IHF). Speaking on the eve of the IHF’s 77th Annual Conference, Stephen McNally, IHF President urged the Government to tackle head on the increasing cost of doing business in Ireland and commit to a national competitiveness strategy to reign in all Government-controlled costs such as local authority rates, water charges and energy-related levies.
Mr McNally states that, hotels and guesthouses have become much leaner since the downturn by restructuring their business models and reducing operating costs by 24% on average since 2008. During the same period, Government determined costs have remained largely unchanged with local authorities failing to address wasteful spending practices and deliver on promised savings and cost-efficiencies.
“Local authorities must do more to achieve cost efficiencies and a substantial amount of these savings must be passed on to businesses in the form of reduced rates and charges to increase competitiveness,” says Mr McNally. “A more focused approach by the Government is also required at a national level to reduce costs imposed by state-owned agencies in the areas of energy, water and licensing. While there have been some token improvements, reforms have not gone far enough. This is a missed opportunity for the economy and needs to be addressed urgently.”
30% Reduction in Local Authority Rates Needed
Mr McNally states that the largest single cost that hoteliers have no control over is local authority rates, with many hoteliers being levied rates of up to €3,000 per bedroom and average local authority rates equating to €1,500 per bedroom, regardless of occupancy rates. It is effectively a stealth tax on tourism equal to approximately 7% per room per night before all other costs and taxes are taken into account.
Two out of every three hotels are still waiting to have their rates reviewed by the Commissioner of Valuation, despite the 2001 Valuation Act having come into force over a decade ago. Mr McNally says: “Those premises that have had their rates reviewed saw reductions of over 30%. In light of this, we’re calling on the Government to instruct the remaining local authorities to introduce the same reduction as an interim measure pending the completion of revised valuations across the rest of the country.”
“The hotels sector continues to bear the brunt of a badly designed system for funding local Government that sees hotels and guesthouses make a disproportionate contribution through local authority rates,” says Mr McNally. “Some of the worst cases of inequitable rates exist in rural areas that are only beginning to recover – which is extremely disappointing given the vital economic and social role hotels play in rural Ireland. Waiting is no longer tenable.”
Background on Local Authority Rates
In Ireland, the Valuation Office operating under the Valuation Act 2001 assesses the level of rates that local authorities can charge businesses. Prior to the enactment of the Act, businesses could seek a revision of their rateable valuations on a number of grounds including deterioration in the profitability of the business. The 2001 Act removed this method of seeking relief on the basis that the legislation envisaged that every rateable property in the country would have its valuation revised every five to ten years.
To date, only a third of properties have had revisions carried out by the office of the Commissioner of Valuation. The revisions that have been completed have resulted in the local authority rates liability of hotels being reduced by on average more than 30 per cent. Based on this experience, it is reasonable to suggest that similar results would be achieved if revisions were completed in the remainder of the country.
ENDS
FOR INFORMATION:
Eoin Quinn / Siobhan Molloy Dublin office: 01 6798600
Weber Shandwick Mobile: 087 233 2191 / 086 817 50 66
NOTES TO EDITOR:
*Survey based on responses owners and general managers of hotel and guesthouse businesses across the country and conducted during February 2015.