THE return of the 20 per cent rate of VAT for hospitality businesses from tomorrow (April 1) will mean higher prices for customers, a leading figure in the hotels industry has warned.
Janice Gault, who heads the Northern Ireland Hotels Federation (NIHF) said there was “massive disappointment” within the industry over the decision to bring the full rate back for the new financial year.
The impact of Covid-19 on the hospitality sector saw the UK Government introduce a temporary reduced VAT rate of five per cent in July 2020.
The cut down rate, which applied to hospitality businesses and hotels, lasted until October 2021, when it was increased to 12.5 per cent.
But Janice Gault said the Omicron wave in the run up to Christmas, which resulted in tighter restrictions and temporary closures, meant businesses here did not get the full benefit.
“The reality of a return to the 20 per cent rate has been met with dismay,” she said.
“This is a cost that will have to be passed on to the customer.
“Food, utilities and staffing costs are increasing at a phenomenal rate."
The Hotels Federation boss said: “There is a fine balancing act between covering costs, making profit and continuing to give guests an affordable and valued experience.
“Hotels need to make profit in order to invest, grow and evolve. It’s a balancing act which is proving increasingly challenging to walk.
“Raising the price of any service is never easy and may test guest loyalty. Adding to the hotel experience can increase costs but helps attract and retain customers.
“However, a punitive VAT rise, with no recognition of the challenges faced and commitment shown, is a careless action ill thought through with repercussions that may hamper restoration.”
