Tourism Industry

11. Deputy Seán Ó Fearghaíl asked the Minister for Enterprise, Tourism and Employment if he has plans to simplify and streamline the regulatory requirements in the hospitality sector. [66815/26]

I welcome the opportunity to raise the very real challenges facing our hospitality and tourism sector. I acknowledge the Government's decision to reinstate a 9% VAT rate. I have spoken to businesses in Killarney, Cahersiveen, Killorglin, Dingle, Castleisland and elsewhere in Kerry and I have been told very clearly that the return to 9% has made a considerable difference. It is giving businesses some breathing space. It is helping them manage their costs and plan with greater certainty. However, the 9% VAT rate does not exist in isolation. Businesses are facing an ever-spiralling circle of increasing costs. We have seen increases in labour costs, insurance, energy, fuel and other inputs.

The latest research shows hospitality electricity costs increased by 61.7% between July 2023 and July 2026 while labour costs increased by 15% and insurance by 26.6%.

I thank Deputy Cahill for his really important question on the hospitality sector. As set out in A New Era for Irish Tourism: National Tourism Policy Statement, the Government will continue to take all feasible steps to reduce the administrative burden for SMEs and the costs of compliance. This recognises that many small businesses in the tourism and hospitality sector can face productivity challenges arising from administrative complexity and regulatory requirements that may be time-consuming and costly. In support of this objective, Fáilte Ireland will embed better regulation principles and streamline its working practices by reviewing the administrative requirements placed on businesses, employees and consumers. Fáilte Ireland will also work with other agencies and bodies to advance the simplification agenda across the tourism sector. Better regulation and simplification are a priority for this Government and one which we have made progress on. Actions taken by our Department include grant simplification, faster approvals, progressing EU regulatory relief, which exempts 80% of small business from the scope of the EU corporate sustainability reporting directive and the expansion of the SME test. We also continue to strongly engage with business on streamlining regulation. Our national regulatory framework needs to be a focus for the Government as we strive to support competitiveness at a time of international economic uncertainty. The regulatory burden on business was highlighted by the chair of the National Competitiveness and Productivity Council at the annual competitiveness summit on 13 July 2026. The cost of business advisory forum report, published just last month, also highlighted excessive and overly complex reporting and compliance obligations, while analysis from the OECD shows that Ireland scores below average in its ex-post evaluation of primary laws and secondary regulations. My Department will shortly follow up with relevant Departments on progressing implementation of the forum’s recommendations.

The situation with energy is particularly concerning. Figures published today show that wholesale energy electricity prices were 76.9% higher in August than there were a year ago, having increased by almost 10% in August alone. Eurostat data also show that Ireland had the highest non-household electricity prices in the EU in the second half of 2025. I am hearing consequences directly from businesses all over Kerry. I know of one business in Killarney that has reduced its headcount from 125 staff to 105 but is still trying to deliver essentially the same level of output. It is stretching its assets, staff and resources as far as it possibly can simply to keep its head above water. This cannot continue indefinitely. The Irish Hotels Federation has made the point that tourism and hospitality support approximately 270,000 livelihoods with around 70% of those jobs outside Dublin. These are not just businesses. They are employers, they are part of our towns and villages, and they are a fundamental part of the regional economy. Having delivered the 9% VAT rate, what further steps can the Government take to tackle the wider cost of doing business, particularly energy, labour and insurance costs in order that the benefit of the 9% VAT reduction is not simply swallowed up by increases elsewhere?

The action plan for competitiveness and productivity published last September includes a range of measures to ensure a more effective regulatory system, supporting sustainable economic growth while controlling overall cost levels. This includes a red tape challenge across government to reduce the regulatory and administrative burden for all SMEs, including those in the hospitality sector. In July, the Taoiseach together with the Minister, Deputy Burke, wrote to all Ministers requesting that each Department, and relevant agencies under their remit, identify actions which can reduce the regulatory and administrative burdens placed on SMEs, which as the Deputy knows, impact their costs. As part of their considerations, Ministers were asked to take account of recommendations from the cost of business advisory forum report and other feedback from their own stakeholder engagement. This exercise is currently under way and progress will be overseen through the Cabinet committee on the economy, trade and competitiveness.

I welcome the response and I reiterate the appreciation I am hearing from businesses all over Kerry for the restoration of the 9% VAT rate, which has made a considerable difference. However, we need to make sure that our hospitality businesses can continue to employ people, invest, remain competitive and provide the tourism product on which communities such as those across County Kerry depend. The concern is that we are now caught in an ever-spiralling circle of the cost of doing business. VAT comes down but energy goes up. Labour costs increase. The cost of insurance increases. Input costs increase and businesses are forced to try to absorb these increases. As I mentioned already, one business I have spoken to reduced its workforce from 125 to 105 while still trying to maintain the same level of output. It is stretching every available resource to keep the business viable. The energy figures published today should concern all of us. Wholesale energy electricity prices were 76.9% higher in August than a year ago.

Certainly people in Kerry will not be lost while the Deputy is here to keep the flag flying for them. The Minister, Deputy Burke, has done incredible work on this. As I already said, he and the Taoiseach wrote to all Departments and Government agencies to ensure that they eliminate all unnecessary administrative burdens that hinder enterprise growth. One of the key highlights in that was the grant simplification. The newly established small business unit has reviewed all LEO grant schemes, including a reduction in application questions, down 47% for the business expansion grants, 30% for the green for business grants and 28% for the feasibility grant with further reductions targeted. Another key piece that the Minister, Deputy Burke, has followed up on is the once-only principle. Work is under way to merge application processes across different grants ensuring businesses only need to provide their data once, which comes back to Deputy Boland's point that we do not have duplication across various grant schemes. Enterprise Ireland has been enabled with achieving faster approvals and a 24-hour turnaround. I can give the Deputy further information to follow up on that.