Irish Hotels Federation Leaders Meet With Ministers

Following a meeting this week with Minister Paschal Donohoe and Minister Jack Chambers, the Irish Hotels Federation (IHF) has reiterated its call for ‘targeted measures’ in Budget 2026 to place Irish tourism and hospitality on a more stable and competitive footing.

The federation noted that this is against a backdrop of ongoing challenges, including serious cost competitiveness issues for hospitality food-related services.

“Restoring the 9% rate of VAT on food services is a key priority for our industry, in line with the commitments set out in the Programme for Government,” said Paul Gallagher, IHF chief executive.

“We understand from today’s meeting that this measure is still under active consideration as part of deliberations for the upcoming Budget.”

Gallagher added, “It is essential that a reduction is implemented from the start of January 2026, given the enormous challenges facing hospitality food businesses throughout the country.”

‘Vital Policy Intervention’

The IHF believes that restoring the 9% VAT rate for food-related services would be a ‘vital policy intervention’ for a sector that supports over 270,000 livelihoods and contributes significantly to the economy.

Crucially, it noted, more than 70% of these roles are outside Dublin, making the industry a key driver of regional employment, economic diversification and rural development.

Gallagher notes that a VAT rate of 9% for food-related services would bring Ireland back in line with the majority of its European competitors.

For instance, Germany has recently announced a reduction in its VAT rate on food services, to 7%, from January next year – down from the 19% rate currently in place.

‘Unsustainable’

Gallagher believes that this move recognises the broader social and economic role played by the hospitality sector and the particular challenges facing food businesses.

“We are particularly concerned about the ongoing drop in expenditure by overseas visitors, as reported by the CSO today,” he said.

“[The] figures show a 4% drop in tourism spend by visitors in July, compared to last year, following an already weak performance year to date.”

Gallagher added, “This poses a very significant challenge for tourism businesses nationwide that are already struggling under unsustainable increases in operating costs.”