Rural tourism will be worst hit by Government's refusal to reduce the hospitality VAT rate in Budget 2025.

Bars, cafés and restaurants across the country were pleading for support from the Government in yesterday’s package – after hundreds of businesses were forced to close in recent months.

Speaking after the announcement yesterday, the Vintners’ Federation of Ireland (VFI) Chief Pat Crotty described the budget as “devastating” for the hospitality industry.

“We have been clear with the Government about the immense pressure pubs are under, yet they have failed to deliver any meaningful support.

“Every minister and TD fully understands this Budget will lead to closures for a huge number of businesses across the country. "

Hospitality VAT

The VAT rate was set at 9% for much of the last decade in the wake of the financial crash and the COVID pandemic; however, it was returned to 13.5% last September.

More than 600 food businesses have been forced to close their doors in the months since.

Irish Tourism Industry Confederation CEO Eoghan O'Meara Walsh told Newstalk the budget was “very disappointing”.

“Irish tourism is having a challenging enough year,” he said.

“I mean the number of bed nights spent by tourists is down in the country and we haven’t recovered to pre-pandemic levels.

“So the sector - which is the largest indigenous industry the country has and the biggest regional employer - is under a lot of pressure.

“We were hoping for a more pro-tourism budget.”

Pints outside a County Clare pub. Image: Paul Quayle/Alamy

He said rural Ireland will be worst hit by the failure to support the industry.

“I think it will be most felt in regional Ireland,” he said,

“I think the urban centres, Dublin and Cork in particular, will do OK because they have a kind of a strong domestic economy and they have strong year-round tourism.

“But I think the rural regional tourism offering is still very seasonal and they are the ones that are going to be hurt most by the fact that the budget wasn’t particularly tourism friendly.”

Budget 2025

Finance Minister Jack Chambers did allocate some €226 million to the tourism sector yesterday alongside a new energy subsidy scheme for businesses; however, the VFI described the supports as “nearly useless” to the industry.

The Irish Hotels Federation (IHF) was equally negative in its reaction to the budget, describing it as offering “next to nothing” for the sector.