The Irish Hotels Federation welcomes this opportunity to address the Special Committee on Covid-19 Response on the pandemic and its impact on tourism, hospitality, hotels and guesthouses.
The Irish Hotels Federation is the representative body of the hotel and guesthouse sector in Ireland. It is a key stakeholder in Irish tourism, working closely with our industry partners to ensure the right conditions are in place for tourism and hospitality to grow and prosper, thereby contributing to job creation.
This is the greatest health crisis in living memory and we appreciate that significant resources are being committed by the Government to address the overriding issue of public health. We also welcome the great progress being made in suppressing the disease. We express our sympathy to the family and friends of all those who have lost their lives.
Covid-19 has had a catastrophic impact on our industry, manifesting itself in job losses, revenue losses and a significant reduction in business financial resources. A much greater focus on tourism is now required given the extraordinary challenges ahead. This should put it at the top of the Government's economic policy agenda with further immediate supports for tourism businesses being made available as a matter of urgency.
We are committed to working closely with the incoming Government and the Minister with responsibility for tourism, Deputy Catherine Martin, to ensure tourism is not left behind. However, we are disappointed with the lack of a dedicated Department with sole responsibility for tourism, Ireland's largest indigenous industry.
The immediate impact of Covid-19 has been the elimination of over €5 billion in tourism revenue, representing a 74% drop for the full year, the closure of 85% of hotels during the lockdown, a collapse in business working capital and an unprecedented level of job losses.
It puts at risk more than 180,000 of the almost 270,000 jobs supported by our industry. With the right Government supports, we project that annual revenues and employment can recover to 2019 levels over a five-year period up to 2025. This would mean €7.7 billion in revenue and the employment of 270,000 people. Without appropriate supports, we see 2025 tourism revenue at €5.4 billion and employment returning to just 190,000 people, which is 30% fewer than in 2019. Over a five-year period, this would represent a cumulative additional loss of approximately €7 billion to the economy and additional cumulative unemployment costs of €3.3 billion.
The Irish Hotels Federation has developed an outline plan to restore activity and employment to 2019 levels by 2025. This will also help restore the estimated €2 billion contribution in tourism taxes to the Exchequer each year, in addition to reducing a potential State bill of €2 billion per annum in unemployment costs. This proposed recovery plan will require a co-ordinated approach from the Government, State agencies and industry stakeholders and will form part of the IHF's contribution to the tourism recovery task force recently announced by the Government, of which IHF president, Ms Elaina Fitzgerald Kane, is a member. While we welcome the various business and employment supports introduced already, they do not go far enough. The tourism and hospitality industry has been far more severely affected and faces a more challenging road to recovery than other parts of the economy. This has not been adequately recognised as yet.
The overriding priority must be to safeguard the livelihoods of the 270,000 people whose jobs are supported by tourism. As such, it is vital that the wage subsidy scheme is continued and extended to include seasonal employees and take account of employees being previously on reduced hours due to seasonality. The scheme should be continued until the impact of Covid-19 restrictions has fully abated.
Additional Government measures on liquidity and competitiveness are also required to protect tourism livelihoods to address the challenges we face. Tourism businesses now have a significantly weakened capital base caused by restrictions introduced to suppress Covid-19. These measures should be tailored to the specific challenges facing tourism to help businesses survive and restart, including significantly increased grants to assist tourism businesses to reopen and survive, 0% interest on Government guaranteed finance and a Government support scheme for the deferral of capital and interest payments for a period of one year. Other countries such as Germany, France and Spain have provided immediate fiscal impulse measures, including direct support to help their businesses restore their capital base and restart.
International competitiveness is key to our industry. We are calling for a reduction in tourism VAT to 5% until December 2021, followed by a permanent restoration to 9% to assist recovery and secure a viable and sustainable future for tourism. International competitiveness is an urgent issue and Irish hotel VAT is now higher than VAT on hotels in 28 European countries with which we complete. In addition, the local authority rates and charges waiver period should be extended to coincide with business interruption due to Covid-19, with a revision of ongoing charges to reflect reduced business activity during the recovery period.
The Irish Hotels Federation has worked closely with Fáilte Ireland-----