‘Victim of geography’: Northern Ireland hospitality leaders say 20% VAT reduces competitiveness

Hospitality operators have told a Westminster committee of MPs that shrinking margins meant its businesses were struggling to survive.

Evidence by operators was given as part of the Northern Ireland Affairs Committee’s inquiry into hospitality VAT and its impact on hospitality and tourism operators.

The hospitality industry in Northern Ireland has made the argument that it has a special need for VAT reduction due to direct geographical competition with the Republic of Ireland, which reduced VAT from 13.5% to 9% in July. VAT for Northern Ireland operators is 20%.

Michael Cadden, chair of Hospitality Ulster and managing director of Lusty Beg Island Resort in Co Fermanagh, told the committee “we are currently victims of our geography” and that is has never been more difficult to run a hospitality business in Northern Ireland.

“We’re no longer seen as a value proposition because we simply can’t afford to compete with the prices, because our cost base and our tax base is so very, very different,” he added.

Selina Horshi, managing director of the White Horse hotel in Londonderry, reiterated the challenge and said that an equivalent business to hers in the Republic of Ireland would retain £4.78 more per £100 room on a VAT basis alone.

“That doesn’t sound like a lot, but we are a high-volume, low-margin industry, and that quickly adds up to hundreds of thousands of pounds within a business each year,” she said.

Horshi added that it would be “disingenuous” to say that a saving on VAT would be passed on to individual customers for her business, but added that it could enable her to give more competitive rates to tour operators who bring in large numbers of guests.

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