Minister accuses hotels of ‘price gouging’ for not passing savings onto customers

Mr Collins said that a VAT reduction in the hospitality sector that was to be passed on to the customer, “clearly wasn’t over the last number of months”.

VAT was slashed from 13.5% to 9% in Budget 2021 in a bid to aid businesses following the impact of the Covid-19 lockdown on the hospitality sector.

The rate is set to return to 13.5% in February of 2023, but Mr Collins says that the hotel sector has not been passing savings onto customers.

Speaking on RTE's Today with Claire Byrne, he said: "We have seen, particularly in the hotel sector, severe price gouging.”

"The VAT reduction in the hospitality sector was to be passed on to the customer. It clearly wasn’t over the last number of months.”

"VAT is a consumer tax and a cut in the rate of VAT is supposed to be a price reduction to be passed on to the consumer, not a mechanism for assisting the business,” he added.

"It’s to act as a stimulant for business by virtue of a price reduction to the consumer and that price reduction was not passed on."

Minister for Finance Paschal Donohue is expected to address the issue when Budget 2023 is announced on September 27.

The Irish Hotels Federation says that a combination of reduced supply, and high demand has meant that average-priced hotel rooms are selling out months in advance.

This is therefore leaving only higher-priced rooms available to customers giving a “false impression” that all prices are being inflated.