Northern Ireland

Drogheda: Would a VAT cut work for NI's hospitality sector?

Drogheda hospitality
Image caption Northern Ireland's hospitality industry have been calling for a cut to the 20% VAT rate for hotels, restaurants and pubs

Drogheda, in County Louth, is a town rich in history and medieval architectural remnants.

It is also a gateway for hundreds of thousands of tourists who visit the nearby pre-historic funeral mound Newgrange and the Battle of the Boyne site.

With its many visitors, the town is also the ideal place to investigate how the hospitality industry fared after the Irish government cut the rate of VAT for hotels and restaurants to 9% in 2012.

Northern Ireland's hospitality industry has been calling for a similar cut to the 20% rate, north of the border.

In Drogheda, many visitors eat at local restaurants like the Michelin-recommended Scholars.

Mark McGowan, its general manager, said the family-owned business, that employs 32 people, struggled because of the recession.

But, he said the decision to lower VAT from 13.5% to 9% two years ago helped the restaurant.

Image caption Eddie Rankin, of the D Hotel, said the business would not have been able to expand without the VAT reduction


"The impact of the reduction of the VAT rate has been fantastic," he said.

"We've been able to employ more staff and customers have been able to benefit as well from lower food prices.

"We've also created two new jobs. So it's a win-win for everybody."

His words were echoed by Eddie Rankin, general manager of the D Hotel, situated beside the Boyne and a short walk from the iconic Viaduct Railway Bridge.

He said there were times when the doom and gloom of the recession greatly worried him.

However, the VAT reduction helped expand the business that now has a workforce of 90 people.

"Without the VAT reduction we wouldn't have been able to develop the business," he said.

"Our gastro-bar, WM Cairns, opened in 2012 and that is a very important part of our business now.

Image caption Patricia King said many hospitality workers were having their employment terms "driven downwards" due to the VAT reduction


"Also, earlier in the year we opened up DeLacy's Seafood Restaurant. And that wouldn't have been possible without the VAT reduction."

Both the D Hotel and Scholars restaurant passed the VAT reduction on to their customers.

But not everybody did, said Patricia King, a senior official in the trade union Siptu.

She said: "We're left in a space where this hospitality sector has seen a lucrative 350 million euros tax foregone to the state, very little passed on in price decrease to the customer, and the workers having their terms and conditions driven downwards.

"So, it's really not a very good idea for those who work in the industry."

Managers in the hospitality industry accept that wages can be low - close to the minimum wage for some - but many have said that tips also have to be taken into account.

Customers like Anne Hodgers, from Drogheda, believe the VAT reduction from 13.5% to 9% has been good for people going out.

Image caption Thousands of tourists visit Drogheda and areas nearby such as Newgrange and the Battle of the Boyne site


"I think it's a great idea," she said. "Obviously, it has been very beneficial for people who want to dine-out and enjoy their social life.

"And it's really good for the town and the economy as well."

Tom Hague, a former publican from Lisburn, agrees.

"I'd very much like to see it happening in the north because it's evident in the south the good that it's doing," he said.

"Anything that helps the catering or hospitality industry has to be good."

The experience of Drogheda seems to suggest that the reduction has been a success.

But, those in the hospitality industry north of the border must know it will be a long and tough fight to get a similar concession for Northern Ireland from the British authorities.

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