Hospitality leaders run through their pre-budget wish lists for H&R Times.
Competitiveness, connectivity and investment are the three pillars the Irish Tourism Industry Confederation (ITIC) built their pre-budget 2026 submissions upon this year. But for ITIC, and for other hospitality and tourism groups, a reduction in the VAT rate to 9% is top of the wish list.
The 9% rate, introduced during the recession, stuck around for a decade before Budget 2023 raised it to 13.5%. A commitment to return to the more favourable 9% rate was promised within the most recent Programme for Government.
Why do we need it?
“To make us competitive and bring us in line with Europe,” Adrian Cummings, CEO of Restaurants Association of Ireland (RAI) told H&R Times. “It means a business owner’s cash flow won’t be tied up paying additional revenue every month. When it went from 9% to 13.5%, we started paying an extra 50%.”
Eoghan O’Mara Walsh, ITIC Chairperson, wants the VAT rate to go a step further. At present, it only covers food services and not bedrooms or accommodation. “We would like to see it extended to the attraction and adventure tourism sectors. They are a bit like restaurants: vulnerable but viable. They operate on very thin profit margins and most are in rural Ireland.”
For ITIC and other industry representatives, cost of business remains the biggest bugbear. “All the evidence,” said Walsh, “points to Ireland being an extremely expensive place in which to run a business. Our competitiveness is being seriously damaged and the budget needs to address that.“
Fáilte Ireland research shows that 51% of tourism businesses have seen a decrease in revenues in 2025 compared with last year. A fall in overseas visitor spend, which typically accounts for 70% of tourism revenue, is a significant concern. The Irish Hotels Federation (IHF) believes this context – alongside the 270,000 livelihoods in the hospitality and tourism sector, and tourism’s huge generator of revenue (€10 billion per annum) – should be a consideration within Budget 2026.
Michael Magner, president of the Irish Hotels Federation, owns the Vienna Woods Hotel in Cork. “My energy costs in 2022 were €120,000 for electricity and gas combined,” he said. “Over the last three years, we invested significantly in energy efficient technology, including sustainable energy around solar panels, heat pumps, etc. This year, however, my combined energy total will be £240,000. That’s double what it was in 2023.”
An initial step for the Finance Minister might be to introduce an annual subvention to businesses to mitigate pass-through charges for energy costs. “If we never burn a light bulb or turn on an electrical or a gas consuming piece of hardware, we are still paying for the privilege of being connected to the network,” explained Magner. “In some cases, pass- through charges for some of our members are in the region of €500 and €600 per day.”
Recent times have seen a myriad of labour costs. Some have slowed – for example, the deferral of the introduction of the living wage until 2029 – but the national minimum wage (NMW) will increase again in January 2026. The RAI and others want the NMW to reflect inflation, rather than continue recent trajectories which saw the wage go up 38% between 2020 and 2025.
IHF, RAI, and ITIC would like to see a meaningful reduction in Employers’ PRSI in the upcoming budget. Although budgets cannot tackle insurance costs directly, hospitality businesses also hope the Finance Minister will address the issue of rising premiums, need for affordable cover, and the need for insurers to pass on savings resulting from recent reforms.
Another concern that is not a budgetary measure, but might be addressed through other funding allocation, is the passenger cap at Dublin airport. “It needs to be addressed very quickly because it’s a handbrake on growth,” said ITIC’s Eoghan O’Mara Walsh. “About 70% of the Irish tourism economy is made up of international visitation. The government could be more generous in terms of the financial support they give regional airports, in particular Shannon and Cork, in terms of runways, piers…”
Michael Magner concurred: “The state needs to increase support for regional airports in line with the EU permissible levels to boost regional connectivity. Budget 2026 needs to identify that while Dublin is the capital and a significant touch point for visitors coming to the country, with the correct investment our regional airports could offer a very attractive alternative for visitors.”
Alva Pearson Downey, CEO of ITOA, told H&R Times we should not take our eyes off the ball. “Our regional airports could be used but one can’t forget the absolute importance of our main international airport in Dublin.”
IHF are among those who want to see increased funding for Fáilte Ireland and Tourism Ireland in order to support sectoral growth, marketing and development. Visitors to Magner’s hotel often tell him “they haven’t visited this part of Ireland before. Colleagues say they have visitors from Ireland that haven’t visited parts of the Northwest. Fáilte Ireland needs to have a greater budget to promote the island of Ireland. Tourism Ireland’s budget needs to be increased to allow them to promote the island of Ireland across the globe.”
ITOA believes additional spend should be allocated to Destination Experience Development (DED) programmes, which develops tourism projects and visitor experiences within specific areas. “Tourism in regional areas is at risk because there’s unavailability of visitor accommodation,” she said. “There are still 57,400 beds under government contract
Budget 2026 might also address increased investment in training, skills and development. IHF called on government to tap into the surpluses in the National Training Fund. RAI, meanwhile, would like to see increased support for Food Tourism promotions and the creation of a Food Tourism Strategy. “There has been no Food Tourism Strategy for the last two years,” said Adrian Cummings.
“When we give money to state agencies, the industry needs to have better input into what they’re actually doing. We need a review into how the money has been spent and if it is fit for purpose and in line with industry expectations.”
RAI has also called for the Finance Minister to introduce a Benefit in Kind exemption for employer-provided accommodation for lower-income staff. “Housing is a national issue,” explained Cummings, “but housing affects everybody.”
Now hospitality and tourism businesses must play the waiting game until October when Budget 2026 is revealed. Nothing is guaranteed; not even the promised VAT reduction. “I know some political and media people are against the return to 9%, but the government, as far as we know, and the Minister for Tourism, Peter Burke, are rock-solid in favour of it,” said Eoghan O’Mara Walsh of ITIC.
“We have to wait and see,” added Cummings. “All the soundings are that it is going to happen. It would be a huge disappointment to our industry if it didn’t happen.”
