Dublin: Ireland’s business community has taken to the streets, demanding urgent government intervention to address the escalating crisis in the hospitality, tourism, and retail sectors. Hundreds of employers marched to Leinster House yesterday, voicing their concerns over rising costs and increasing closures. The protest was organised by the Restaurants Association of Ireland (RAI) and the Vintners Federation of Ireland, with additional support from Retail Excellence Ireland and the Irish Small and Medium Enterprises Association (ISME).
Rising Costs and Business Closures
The primary issue facing the sector is the sharp increase in operational costs. According to the business community, staff costs alone are rising by an estimated 9% annually, while expenses related to energy, insurance, and ingredients have surged by 15–18%. Additional financial pressures, including salary hikes, increases in the minimum wage, pension auto-enrolment, and changes to sick leave entitlements, are driving costs even higher. Small businesses are finding it increasingly difficult to keep up with these rising expenses, leading many to shut down.
Impact on the Hospitality Sector
The hospitality sector has been hit particularly hard. The VAT rate was raised from 9% to 13.5% in September of last year, a move that has contributed to the closure of 612 establishments. So far this year, 108 businesses in the hospitality industry have shuttered. Rising energy, staff, and insurance costs are further eroding profit margins, and small and medium-sized enterprises (SMEs) are struggling to survive in this challenging environment.
Increasing Insolvencies in the Hospitality Industry
The number of bankruptcies in the hospitality sector continues to rise, exacerbated by the withdrawal of COVID-19 financial aid. Even after the Revenue Debt Warehousing Scheme’s repayment deadline passed last month, 1,820 firms have defaulted on their obligations, representing 15% of the total debt under the scheme. Of these firms, a quarter owe more than €100,000 in liabilities.
A recent analysis by PwC found that hospitality businesses liquidated over the past 21 months had average total liabilities of around €380,000. Of the 110 insolvencies in the hospitality sector this year, 98 were liquidations, with liabilities amounting to approximately €37.2 million.
A Glimmer of Hope: New Startups
Despite the challenges, the number of new startups in the hospitality sector has increased by 1% in the third quarter of the year, indicating that some entrepreneurs are still willing to enter the market. To support struggling small businesses in retail and hospitality, the government has announced a €170 million “Power Up” grant. While the situation remains difficult, there is an opportunity for those with experience and determination to take over businesses that are closing, with the aid of government support.
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