Tourism Leaders Respond Positively to Ireland’s 2026 Budget Measures

Tourism leaders in Ireland expressed a generally positive response to the measures outlined in the 2026 Budget presented by the Government on October 7, 2025. The announcement by Finance Minister Paschal Donohoe included a significant reduction in the VAT rate for food-serving hospitality businesses, lowering it from 13.5% to 9%. While this move was anticipated, industry stakeholders had hoped for a broader application that would encompass caravan parks, visitor attractions, and adventure holiday operators.

The Government indicated that this VAT reduction will support over 150,000 jobs nationwide, providing a crucial lifeline for the struggling tourism sector.

Industry Responses to Budget 2026

The Irish Tourism Industry Confederation (ITIC) welcomed the measures, acknowledging the government’s recognition of the challenging trading environment faced by hospitality businesses. Eoghan O’Mara Walsh, CEO of ITIC, stated, “The government has acknowledged the difficult trading environment of the hospitality sector. Although we would have preferred the restoration of the 9% VAT rate to take effect at the beginning of the year, it is very welcome that it will come into effect on July 1st.”

Walsh also noted the modest increase in tourism budgets, which is expected to aid in diversifying the industry’s marketing efforts. He emphasized the importance of tourism as the largest indigenous industry and a major regional employer in Ireland. The sector is currently facing a challenging year, characterized by mixed demand and squeezed profit margins, making the support from Budget 2026 a step in the right direction.

The Irish Hotels Federation (IHF) also expressed approval of the VAT reduction. IHF President Michael Magner remarked, “The lower 9% VAT rate is a crucial intervention for struggling food service businesses across the country at a time of enormous challenges and unsustainable increases in operating costs.” He added that aligning Ireland’s VAT rate for hospitality food services with that of most European competitors is essential, given the significant social and economic contributions made by the industry.

Magner highlighted that the tourism sector supports over 270,000 livelihoods, with more than 70% of these jobs located outside Dublin. This underscores the sector’s pivotal role in driving regional employment and economic diversification.

Calls for Long-Term Stability

While welcoming the changes, Magner urged that the VAT reduction should be made permanent. He stated, “Given the ongoing challenges facing our sector, including serious cost-competitiveness issues, we are calling for this reduction to be made permanent in order to provide greater long-term certainty to those businesses that are heavily reliant on food services.”

Additionally, Magner praised the increased funding allocations in Budget 2026 for Fáilte Ireland and Tourism Ireland. He noted, “This increased funding for both state agencies reflects the vital role they play in developing and expanding our tourism product and market reach in what is an exceptionally competitive global environment.” This support is seen as critical for promoting Ireland as an attractive tourist destination and ensuring the industry can build on previous successes.

Overall, the response from tourism leaders indicates cautious optimism regarding the measures in Budget 2026, highlighting the need for continued support and strategic initiatives to strengthen Ireland’s tourism sector in the face of ongoing challenges.