County Londonderry hotel owner Selina Horshi said “it is really challenging” especially as her “international competitors are actually only three miles down the road” in Donegal.
“That difference in the tax rate makes a huge difference to your competitiveness,” she said.
“A customer looking at where they might want to spend a night, where they might want to celebrate their wedding is not looking at a different tax policy, they’re looking at the final price and the final prices can be significantly cheaper in the Republic of Ireland than in Northern Ireland simply due to that tax policy.”
She said it is having “a big impact” on hospitality business in Northern Ireland.
“Whether that is somebody who’s booking a single event or whether that is a big multinational tour company who brings thousands of tourists in on buses.
“Imagine if they’re making the decision as to whether they stay in Derry where it’s more expensive, or they stay in Donegal where it’s cheaper.
“Suddenly our city just becomes a day trip. They walk the walls which are beautiful, they go to the Guildhall but essentially they haven’t spent a penny in this city.
“They aren’t spending money in local retail, in local pubs and they’re not putting money into local taxi driver pockets.”