Rising costs posing continued profitability issues for businesses, says Fáilte Ireland

Sustained inflation has led to many operators struggling to break even with 68% citing ‘rising energy costs’ as a concern

Recovery in the North American market continues this year, with 80% of hotel visitor numbers up annually, followed by 76% of tour guides and 72% of inbound tour operators

More than half of Ireland's tourism businesses had more visitors to date this year compared to 2022, however, rising costs have led to sustained profitability challenges for the sector, a new report from Fáilte Ireland shows.

Publishing its Strategic Research and Insight Barometer for September, Fáilte Ireland found that the overseas market, specifically, North America, has performed strongly, whereby 59% of operators report being up year-to-date.

Within the sector, 77% of tour operators saw customer numbers increase this year, along with 68% of hotels and 66% of attractions, however, the report noted that activity providers, restaurants, pubs and bars "do not share the same buoyancy in visitor numbers as the other sectors."

According to the tourism authority, these sub-sector challenges have been hit by a combination of factors which include a lack of disposable income, bad weather, rising operating costs and a shortage in tourist accommodation.

Sustained inflation has led to many operators struggling to break even, says Fáilte Ireland. Just over two thirds cite ‘rising energy costs’ as a concern, with 69% citing ‘rising operating costs besides energy."

Supply shortages are also impacting non-accommodation operators, with many saying that a lack of shelter is causing further struggles. Ireland's tourism sector is largely dependent on foreign markets, with the domestic market believed to be down due to a combination of perceived better value for money abroad and the poor summer weather this year.

Recovery in the North American market continues this year, with 80% of hotel visitor numbers up annually, followed by 76% of tour guides and 72% of inbound tour operators.

Mainland European markets are also recovering well, whereas the GB market continues to decline, the report found.

Those who have benefitted from a growing North American market have achieved profitability, however, Fáilte Ireland said that food & drink operators as well as activity providers are reportedly struggling to remain in business. 

Looking forward, expectations for overseas market are high in every sector except those which have not performed well this year – activity and food & drink providers. 

All regions expect the overseas market to be up, except for Ireland’s Hidden Heartlands, where the outlook is more mixed. In addition, Fáilte has said that sectors which have performed well so far this year expect their success to continue, with struggling sectors not optimistic about improvement.

Going ahead, the report outlined a number of concerns for the future, namely, the introduction of a VAT increase on hospitality, significant challenges with rising costs, bad weather, accommodation issues, value-for-money perceptions and antisocial behaviour in Dublin.