Northern Ireland Hotels Federation (NIHF) CEO Janice Gault said:
“This week marks the two-year anniversary of the start of the COVID-19 pandemic in Northern Ireland which resulted in closures and restrictions for the hotel sector.
Since the 27th March 2020 hotels have been closed for 312 days and traded under a variety of restrictions for 257 days. The final operational restrictions were lifted on the 14th of February this year but it appears that there remains little love or understanding for a sector that has suffered longer and deeper than most others given today’s autumn statement. Since July 2020, hotels have benefited from a reduced VAT rate. This was originally 5% rising to 12.5% in October 2021. A great initiative which gave the industry the opportunity to trade and offer some hope of fiscal restoration.
The hope was that the Chancellor would see the continued stress within the industry and take account of the fact that businesses had only benefitted from the VAT reduction for less than 250 days in his Spring Statement today. Regrettably this was not the case and after considerable lobbying from the sector and political representatives, VAT will rise by 7.5% in April returning to the standard 20% rate. This cost will have to be passed onto customers. Businesses do not have the ability to absorb this on top of a 6.5% rise in minimum wage and incremental payroll increases, double digit increases in energy tariffs, and food inflation running well above 10%.
The cost of doing business has been well documented and this, coupled with a squeeze on disposable income, is heightening tensions in the hotel, hospitality and wider tourism sectors. The industry received considerable support through the pandemic, and it was hoped that its role in society along with the plight suffered since March 2022 would resonate with the Treasury, but it has fallen on deaf ears.
Hotel occupancy was 54% in 2021, well down from the 70% plus pre-pandemic levels, and with restrictions on international travel only recently lifted, staycations will form the bulk of trading in the coming season. The industry worries that the cost of doing business will damage business and extend the recovery process for the hotel sector”.
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