A leading Kerry hospitality professional has said hotels and restaurants are caught in a “vicious circle” because if they want to serve good food, they have to buy good food and it is very expensive because the farmers have to be paid as well.
Hotelier John Brennan said the industry can manage factors like wages, insurance and energy costs but it is inflicted costs like commercial rates that are causing the most damage.
He said some hotels have seen their rates triple in the past year and that’s a huge cost to place on the shoulders of any business.
Mr Brennan said most hospitality businesses pay out 40 per cent of their income on wages but that’s understandable because you cannot pay low wages in a country with such a high cost of living and with soaring rent costs.
Rates, compulsory sick pay payments and pension contributions coming down the line are other major factors and the only people that are going to have to pay for it are the customers
”No one else is going to give the business money. It’s a very delicate balancing act to get right,” he insisted.
“No matter what they do, no matter how many people come through the door tomorrow, they are going to have to pay those rates”.
Speaking on The Hard Shoulder on Newstalk, the Kenmare hotelier said he had no problems paying VAT once business is good and money can be made but he questioned why the VAT rate in Ireland is 13.5 per cent when it’s 10 per cent in competing countries across Europe.
He pointed to the hidden costs that customers don’t see and, as an example, he said two commercial-sized drums of Fairy Liquid cost €24 two years ago but now it’s €16 for one.
Mr Brennan, a highly respected hospitality consultant, added that he recently went to a local butcher shop and paid €43 for a fillet of beef to serve for three people.
“People might say they went to this restaurant or that restaurant and it was very expensive but it has to be expensive,” he said.
“I don’t think we have seen food inflation in the previous 15 years than we have in the last two or three years. That has put a pressure on everything,” he said.
On the subject of visitor numbers, he said there has been an upward curve over the past 15 years with low double digit growth on an annual basis. Attractions like the Wild Atlantic Way and other initiatives by Fáilte Ireland and Tourism Ireland have made a big impact.
But business has fallen back a little since “the madness of travel” that followed Covid when everybody was desperate to get away for five or six holidays a year.
He stressed, however, that there is a need for businesses to rejuvenate as they can’t sell the same thing every time and he said there has been a huge increase in the number of “uninteresting modular hotels” that tick every box for the grading system but don’t offer much personality.
The emphasis has to be on quality. and that’s the best way to promote and market a business and the country.
Despite talk of emerging markets like China, India and Brazil, that influx is still small and America is still by far Ireland’s greatest customer.
“At the end of the day the backbone of Irish tourism is America with the number two being the Irish domestic market which is hugely important,” he said.
The England, France and Germany markets were still small, considering the spend per head.
“You fish where the fish are. There are 19 flights from North America arriving into Ireland every day. That’s phenomenal for a small little country on the west coast of Europe,” he said.
“America’s connection with Ireland has always been very strong”.
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