'It is vital' - Carlow hoteliers urge government to put Irish tourism on a more stable footing

In advance of Budget 2026, Carlow-Kilkenny hoteliers are calling on the Government to deliver targeted measures to safeguard the long-term viability of Irish tourism and hospitality.

The upcoming Budget takes place against a backdrop of ongoing challenges for local tourism businesses, including serious cost competitiveness issues for hospitality food-related services.

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Patrick Kickham-Lennon, IHF South East Branch Chair notes that, as Ireland’s largest indigenous and regional employer, tourism and hospitality supports over 270,000 livelihoods nationally including 6,600 jobs locally in Carlow-Kilkenny.

Mr Kickham-Lennon says:

“It is vital that the Government takes decisive action to place Irish tourism and hospitality on a more stable and competitive footing. Local businesses in Carlow-Kilkenny are struggling to deal with exceptionally high operating costs and tight margins. This is especially challenging for regional food businesses. These businesses are now threading a fine line between covering ever-increasing costs and losing competitiveness.”

This comes at a time when Irish tourism is experiencing difficult headwinds on multiple fronts, including declining tourism revenues, economic challenges across our key source markets, increased political uncertainty internationally and the fallout from EU/US tariffs. These factors collectively pose significant threats to the wider tourism and hospitality industry.

Mr Kickham-Lennon urges the Government to deliver on its commitment to reduce the rate of VAT on hospitality food business:

“A rate of 9% VAT for food related services would align us with the majority of our European competitors. For instance, Germany has recently announced a reduction in its VAT rate on food services to 7% from January next year, down from 19% currently in place. This move recognises the broader social and economic role played by the hospitality sector and the particular challenges facing food businesses.

“We need a similar approach here in Ireland without delay. Restoring the 9% VAT rate for food-related services from January would be a vital policy intervention for a sector that contributes significantly to our economy as a driver of regional employment, economic diversification and rural development.”

He notes that eighteen of the EU’s 27 member states apply a food VAT rate lower than Ireland’s 13.5%. The average rate among those 18 countries is just 9.5%. This makes Ireland’s food VAT rate an outlier in the EU and places unnecessary strain on the country’s food industry.

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Irish Hotels Federation’s key policy priorities for Budget 2026:

• A permanent restoration of the 9% VAT rate on hospitality food services. This is key to supporting the viability of our tourism food offering.
• Measures to tackle excessive business costs, which are amongst the highest in Europe, including insurance premiums and energy pass through charges.
• Measures to assist hotels develop employee accommodation to address staffing challenges arising from a shortage of affordable housing.
• More targeted measures to support sustainability initiatives within the hotels sector in line with Ireland’s national climate action goals.
• Increased funding for Fáilte Ireland and Tourism Ireland to support sectoral growth, marketing and development.
• Measures to support enhanced air access for visitors.
• Increased investment in training, skills and development, leveraging the enormous un-tapped surpluses in the National Training Fund.