Donegal tourism put on the back foot if NI VAT cuts are not copied here

‘2020 is lost for tour operators’ – says local tour guide Henry Doohan as a bleak year lies ahead for his business.

There are fears that Donegal’s tourism and hospitality businesses stand to suffer even more this summer if a lower VAT rate is not introduced to compete with Northern Ireland.

Henry runs the ‘Donegal Tour Guide’ company. The Covid-19 pandemic has all but put the brakes on his popular private day tours.

While Doohan is taking all possible health and safety precautions, social distancing is one major hurdle for his Donegal tours. Another is this year’s shift towards staycations.

As Northern Ireland lowers VAT for pubs, hotels and visitor attractions from 20% to 5% until January, businesses in Donegal fear they are at even more of a disadvantage this summer.

“If a 5% tourism VAT rate is introduced in Northern Ireland and not in the Republic, Donegal businesses will certainly suffer,” Doohan said.

“If hotels etc. in Northern Ireland pass on the savings to their customers, that immediately creates better value offers just a few miles from here. If they don’t pass on the savings and stick to their normal rates, they will have a better markup, helping them to recover from the lockdown and steer their business back on track.

“Either way, Donegal tourism businesses are starting off on the back foot half way through the year trying to minimise their losses or at least break even.”

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Doohan suggests that a travel incentive such as a 5% VAT rate could be the difference in local businesses surviving or not.

“There are too many abandoned hotels in County Donegal. Everything possible should be done to avoid any more,” he said.

A survey by the Irish Hotels Federation (IHF) shows occupancy levels of 23% and 26% for the peak summer months of July and August, compared to an average of 90% for the same period last year. Occupancy for September, traditionally a popular time for US visitors, currently stands at 22%.

A lack of US visitors will have a major impact on Doohan’s Donegal tours. He owns a luxury people carrier that seats eight, but under social distancing he can only facilitate two back seat passengers. Plus, Doohan’s private excursions around Inishowen, Donegal and the North West rely on people travelling in their own small groups. However, the market for these is overseas visitors, mostly Americans, who don’t have their own vehicle.

Doohan said he feels his industry has been overlooked by guidelines and supports.

“The domestic market doesn’t tend to require a private chauffeur. I can’t offer public tours due to the social distancing and I know that larger coach tour companies can’t even make it viable to offer public tours with the low capacity allowed due to social distancing.”

Irish tourism businesses are awaiting details on the government’s July stimulus package to see what supports will be offered to save the sector.

In the meantime, one solution for tour guides would be an immediate waiver on fees:

Doohan said: “Tour operators invest heavily in their insurances and licences each year. I feel that as well as VAT reductions, vehicle fees that were paid for 2020 should be carried over into 2021 to help with next year as 2020 is lost for tour operators.”