The Irish Hotels Federation says its members are going to cut the €90m annual rates bill for local authorities by paying what can be afforded. Room numbers rose from 26,000 in 1996 to 64,500 in 2008.

The IHF says that the 900 hotels in Ireland encompassing 60,000 bedrooms pay approximately €90m a year to local authorities in rates. This equates to an average of €1,500 per bedroom and in many cases, rising to high as €2,500 - €3,000 per room in some local authority areas. “The Federations 900 members pay 6% of the total rates base in this country; this is an unreasonable burden on such a small number of businesses. It is plainly oblivious that my members are not in a position to continue to shoulder this unreasonable burden and the government and local authorities need to wake up to this fact,” IHF president Paul Gallagher said.

The industry body said hoteliers have negotiated with suppliers substantial reductions in input costs in order to deal with the recessionary pressures, one major cost to hotels which has not reduced is local authority rates. It said this is partly due to the nine year delay in the Valuation Office revaluing properties. The IHF President urgently called on the Minister for the Environment, to immediately instruct local authorities to introduce a rates waiver for hoteliers who simply do not have the funds to pay.

Paul Gallagher also called on each local authority in the country to recognise the particular difficulties being faced by hotels at this time and to agree to accept from hotels an amount of rates that each property can afford to pay. He particularly urged them not take legal actions which would force hotels or guesthouses to close or go into receivership or liquidation.

According to Gallagher a mechanism in the past where struggling hotels could seek a reduction in valuation, for local authority rates purposes, due to worsening economic trading circumstances was removed with the enactment of the Valuation Act 2001. This Act promised that all rateable properties throughout the country would have had their valuations revised every 5-10 years. Nine years later and only three (of the 88) rating authorities have carried out the revision process and two of those undertaken had rates payable by hotels reduced by an average of over 30%.

The IHF says a vast majority of the hotels in the country are now in financial crisis due to:

• an excess of hotel bedrooms over demand,
• 30% decline in the sectors revenue
• a fall in occupancy rates of hotels and
• a collapse in hotel room rates.

SEE: Finfacts report August 2008; Davy says Irish Tourism troubles are threat for economy and banks; Hotel bedroom numbers jumped from 26,000 in 1996 to 64,500 in 2008 - a surge of 150% - while tourist numbers rose just over 70%