Irish Hotels Face Cost Pressures Amidst Cautious Optimism for 2026
Ireland’s hotel sector is bracing for a challenging year, with mounting business costs and global economic uncertainty identified as key concerns. Despite these headwinds, a recent survey conducted by the Irish Hotels Federation (IHF) reveals a cautiously optimistic outlook, fueled by stable forward bookings and planned investment in upgrades and sustainability.
The Cost of Doing Business: A Major Hurdle
Nine in ten hoteliers (92%) expressed worry about the international economy and potential political instability in key markets. Simultaneously, 76% are concerned about the Irish economy over the next 12 months, citing pressure on consumer finances. IHF President Michael Magner highlighted that Ireland is an outlier in terms of costs, particularly in energy, insurance, and general services.
Data from Eurostat confirms this, showing Irish hotels and restaurants are the second most expensive in the EU, surpassed only by Denmark. This cost structure inevitably impacts pricing, though Ireland maintains a reputation for high-quality accommodation.
Resilience and Investment Despite Challenges
Despite the concerns, the Irish hotel sector demonstrated robust performance in 2025, with average national room occupancy reaching 76%, a 1% increase from the previous year. Whereas Dublin led with 83% occupancy, a “significant regional disparity” existed, with the border region recording 70%.
Looking ahead, over half (51%) of hoteliers reported a positive outlook for trading conditions in 2026, with only 13% expressing a negative view. This optimism is supported by stable forward bookings.
Notably, 75% of hoteliers plan to increase capital investment in the coming year. Key areas of focus include guest bedroom refurbishment (61%) and upgrades to restaurants, bars, and common areas (47%).
Sustainability Takes Center Stage
A significant trend emerging within the sector is a growing commitment to sustainability. 53% of hotels intend to increase investment in sustainability initiatives in 2026, with an additional 32% actively exploring options.
Investment targets include renewable energy and energy efficiency solutions (60%), food waste reduction (33%), and water conservation measures (26%). This reflects a broader industry shift towards environmentally responsible practices.
Government Support and VAT Rate
The government’s decision to restore the 9% VAT rate on hospitality food services from July will partially offset rising costs for food-led businesses. This measure is expected to provide some relief to operators facing tight margins.
Frequently Asked Questions
Q: What are the biggest challenges facing Irish hotels in 2026?
A: Mounting business costs, particularly in energy and insurance, and global economic uncertainty are the primary challenges.
Q: Is the Irish hotel sector still attracting investment?
A: Yes, 75% of hoteliers plan to increase capital investment in the coming year, focusing on refurbishment, upgrades, and sustainability.
Q: What is the IHF doing to address cost concerns?
A: The IHF is advocating for a renewed national focus on cost competitiveness and welcomes the government’s decision to restore the 9% VAT rate on hospitality food services.
Q: What is the current occupancy rate in Irish hotels?
A: The average national hotel room occupancy stood at 76% in 2025.
Did you know? Ireland’s hotel and restaurant sector is the second most expensive in the EU, according to Eurostat data.
Pro Tip: Hotels looking to attract environmentally conscious travelers should prioritize investments in renewable energy and waste reduction programs.
We encourage you to share your thoughts on the future of the Irish hotel industry in the comments below. Explore our other articles for more insights into the tourism and hospitality sector. Subscribe to our newsletter for the latest updates.
