Business costs are ‘main challenge’ to hotel owners as Government decision to increase tourism Vat makes an impact

The survey, which was conducted ahead of the group’s annual conference today, revealed that 47pc of 200 hotel owners and general managers surveyed are optimistic about trading conditions over the next 12 months.

This is down from almost three-quarters of this cohort a year ago.

Hoteliers pointed to business costs as the main challenge this year, with some forecasts suggesting that the industry could face a further 8pc rise in costs this year. This follows two years of increases, the IHF said.

Almost 80pc of hotels said they were concerned about the economic outlook for this year as forward bookings are down 4.5pc compared to the same period last year.

Around 53pc are reporting a net decrease in bookings, with those surveyed pointing to a decline from Ireland, the UK and Europe.

Demand from visitors from North America has not slowed, the research found.

“We are seeing the impact of the Government’s decision to increase tourism Vat, making us an outlier with the third highest rate of Vat in Europe,” IHF president Denyse Campbell said.

She called on the Government to do more to lower the costs facing the tourism and hospitality industry.

“This is a major challenge for tourism and hospitality, our largest indigenous employer,” she said.

“Increasing costs are continuing to erode our competitiveness as a destination and jeopardise the sustainability of our wider industry – a vital part of the economy supporting some 270,000 livelihoods, 70pc of which are outside of Dublin.”

Despite an increase in costs, hotels are continuing to invest in properties to attract new visitors, with 78pc planning investment projects in the year ahead. This includes refurbishment of guest bedrooms and common areas, as well as guest technology.

The IHF represents 900 hotels and guesthouses located across the country, which employ over 65,000 people.