Hotels body renews call for 9% VAT rate amid ‘ever-increasing operating costs'
Irish Hotels Federation
(IHF) has renewed calls on the Government for a 'permanent restoration' of the 9 per cent VAT rate on the hospitality food services sector amid 'ever-increasing operating costs' in the upcoming budget.
The IHF, the body for the hotel and guesthouse sector in Ireland, said the industry is experiencing 'difficult headwinds' amid the ongoing economic uncertainty caused by US import
tariffs.
'Tourism businesses are struggling to deal with ever-increasing operating costs and tighter margins,' said the president of the Irish Hotels Federation, Michael Magner. The IHF holding an event in Buswells Hotel with public representatives on Wednesday to explain their position.
'It is now essential that the Government tackles this head on and delivers targeted measures to enhance cost competitiveness and support business viability,' he said.
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Reducing the value added tax (VAT) rate to 9 per cent has been an ongoing campaign by the hospitality sector. The cost to the exchequer to stand at €764 million annually if applied to the full sector, or €545 million if restricted to food and catering services, as per estimates from the Tax Strategy Group in 2024.
In an effort to boost tourism numbers, the sector called on the Government to enable 'enhanced air access' at Dublin and regional airports. The request comes amid rising scrutiny over the passenger cap at Dublin Airport, which the DAA expects will be breached this year.
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To aid the sector in riding out the wave of economic difficulties, the hotels group also appealed for the Government to introduce measures to tackle 'excessive' business costs such as insurance premiums and energy pass through charges.
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The body requested increased investment in training and skills development for the sector through the National Training Fund and additional funding allocations to the public bodies, Fáilte Ireland and Tourism Ireland.
The hotels federation president said that reduced tourism expenditure combined with economic challenges and political uncertainty post a 'serious risk' to the industry. He pointed to data from Fáilte Ireland showing 51 per cent of tourism businesses
The sector, which generates €10 billion in revenue annually, was found by Fáilte Ireland to have seen 51 per cent of hospitality businesses see a decrease in revenues to date in 2025 compared with last year.
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