Cut Tourism VAT

Cut tourism VAT, boost british jobs

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Tuesday, 02 June 2015

Case study: Comparing Tourism VAT in Northern Ireland and the Republic of Ireland

Eddie McKeever of McKeever Hotels Group operates both in Northern Ireland (Tourism VAT at 20%) as well as the Republic of Ireland (Tourism VAT at 9%). In the below post he shares his personal experience as to how the lower rate in the Republic of Ireland has helped his business invest in staff and establishments:

We are a family business that operates on both sides of the border.   Having bought Dillons Hotel in Letterkenny just over a year ago, we have been surprised at the difference in the net earnings compared to our Hotels in the north. The 11% difference has meant that our margins are not squeezed as much and this has had many benefits both in terms of running a business and customer experience. The largest benefits we have found are:

  • Employment:  The extra 11% has allowed us to create more jobs than we had initially forecasted. Internally, this has meant that we have additional staff on at key times, ensuring excellent customer service, which has lead to increase revenue and customer retention.  Externally it has also meant that we have been able to create more jobs in the community, thus helping the local economy as a whole.
  • Investment: Initially we forecasted the complete refurbishment and investment at Dillons Hotel would be a 2 year project as similar projects we had undertaken in the North.  However having the lower VAT rate gave us the confidence and extra resources to fully refurbish the hotel in 1 year, speeding up our ability for growth.  This injected funds into the local economy and had a positive effect on the morale of the town centre who had a new positive story for their town centre. Since completion surrounding shops, bars and restaurants have invested in their own properties, which has lead to an increased footfall back in the town centre.

Investing this heavily, in such a short space of time is not something we would have been able to do in Northern Ireland at the moment as margins are so tight it diminishes confidence to put the extra resources in with the fear of leaving yourself exposed.

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