Hospitality Survives a Tough 2024

Nobody in hospitality is pretending that 2024 was easy.

Despite a buoyant economy, hotels, restaurants, pubs and visitor attractions struggled in the face of rising costs and fewer domestic visitors, although overseas numbers grew.

Restaurants were hit most by rising food and labour costs which put their margins under serious pressure. They also had to cope with a return to a 13.5% VAT rate.

The sector mounted a strong campaign in the lead up to Budget 2025 seeking a return to the concessionary rate of 9%. No change was however forthcoming. Once the General Election was declared, the “9%” campaign was revived, and it did elicit promises from some parties, but the industry must wait to see if these will come to fruition.

However, almost €400 million was paid to SMEs under the Power Up grant and the Increased Cost of Business Scheme this year. The schemes were designed by the Department of Enterprise, Trade and Employment and administered by the Local Authorities with the aim of helping businesses with the increased costs associated with running a business.

The squeeze on margins was felt throughout the sector with Failte Ireland data showing that 64% of tourism and hospitality businesses expect profitability to be down on 2023.

The crucial summer tourism season was a disappointing one for more than half of operators here. More than half (53%) of those industry providers had fewer customers this summer than last, with 23% reporting similar levels and 24% recording more.

The data also shows that visitor numbers were down in all markets and in all regions of Ireland.

North America was the most valuable market, with visitor numbers up and the length of overnight stays also higher, according to the most recent figures from the Irish Tourism Industry Confederation.

While the North American market was strong, other key sources of business - from Britain to Europe to the domestic market - were soft.

Looking forward to 2025, there are also bright spots on the horizon with the expansion of direct flight routes, especially from the United States. Throughout the year, airlines announced new routes, including Ryanair flights from Cork to Brussels and Rome, and extra flights on its 17 routes from Shannon, as well as direct routes with Aer Lingus to Nashville, Tennessee and Indianapolis, Indiana, as well as Cleveland, Ohio.

The issue that dominated aviation in 2024, however, was the passenger cap in Dublin Airport. Introduced in 2007, it limits the number of passengers who can pass through Dublin Airport in a given year. It was set at 32 million per year, and it has not changed since.

At the time, it seemed a relatively reasonable number, as it was well above the 23 million people who passed through Dublin Airport in 2007. However, it became a source of contention during the year as passenger numbers climbed, with worries that it could affect tourism numbers to the country.

Based on forecasts for December, daa continued to warn that passenger numbers through its terminals will exceed 32 million and will be over 33 million for the full year 2024.