The Covid-19 pandemic touched almost every aspect of our lives and left virtually no part of the Irish economy unscathed. However, the hospitality sector was among the hardest hit, with the effective shutdown of international travel and the sometimes complete closure of hotels, restaurants and pubs bringing it to its knees at various points over the course of almost two years.
In such a context, the Government’s move to extend the special 9 per cent VAT rate for the sector beyond its current expiry date of next August is welcome. The extension will cost up to €250 million but will be money well spent. In fact, it might not be money spent at all if it does what is intended and ensures the sector remains competitive with its future secure.
In pre-pandemic times, the many strands of tourism here employed more than 300,000 people and generated about €6 billion in revenue for operators. In 2019 more than 11 million visitors travelled to Ireland, with their spending boosting the exchequer's balance sheet by about €2 billion. But then Covid hit. In 2020 and 2021 overseas visitor numbers collapsed to less than two million, with Irish hotels posting revenue losses of around €5 billion.
But after the darkness comes the light and while it is too early to talk of a full-blown recovery for tourism here, the outlook is promising. A recent conference in Berlin heard that Irish hotels were above 81 per cent of 2019 occupancy levels over four weeks last month, making them the third-best performing in Europe behind only Britain and Poland.
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Meanwhile, air traffic will reach around 90 per cent of pre-pandemic levels this summer which augurs well for a decent – if not necessarily stellar – season for international visitors.
Dublin, which struggled over two years of staycations, is bouncing back with the recovery evident across both the leisure and corporate market while the lucrative wedding industry may be forgiven for humming a quiet ode to joy as a season of celebrations untroubled by restrictions and cancellations starts.
But there are challenges too. The spiralling cost of everything from food and fuel to lights and labour is putting the sector under enormous pressure, staff shortages are hugely problematic, while the war in Ukraine as well as Covid will play on the minds of many would-be tourists this year.
As is the case elsewhere, prices and affordability will be to the fore like never before this summer and the entire hospitality sector must tread carefully and use its VAT bonus wisely, giving all guests the best value for money it possibly can. With less money in their pockets, many will be acutely sensitive to what they regard as price gouging and far less forgiving of those who stand accused of it.