Irish hotels have benefitted from a myriad of tax incentive schemes which are now seriously affecting the tourism industry as a whole. The tax breaks were exploited to such an extent that not only were too many rooms added creating massive over-capacity but many hotels were built in ridiculous locations. Tax break hotels were often built by developers rather than hoteliers and all they cared about was a 7 year tax freebie. They couldn’t have given a jot about the guest.
The sting in the tail of the tax break is that if a hotel that has benefitted from these tax breaks does not stay open for seven years after the development, the investor will have to repay the tax breaks against their personal tax bills. What we have now is a situation where unprofitable hotels remain open, reducing rates to ridiculous levels thus seriously damaging those operations that are viable. The Irish Hotels Federation has calculated that there are 21,000 hotel rooms that fall short of the 7 year requirement (out of a total number of about 60,000 hotel beds in the country). Another scary figure is that the average occupancy rate over all hotels in Ireland is just 53pct and overseas visitors to Ireland this year have declined by nearly 19pct.
