Fewer than one in eight hoteliers has a negative view of the trading outlook for the sector over the next 12 months, despite concerns about the impact of global uncertainty and rising business costs.
This follows a robust performance by the Irish hotels sector in 2025, with average national hotel room occupancy standing at 76 per cent for the year as a whole, up 1 per cent on the previous year.
While most regions saw an increase in occupancy levels, significant regional disparity persists, ranging from 70 per cent occupancy in the border region to 83 per cent in Dublin.
IHF president Michael Magner said the group is “cautiously optimistic” for the coming year, as forward bookings suggest business levels will “remain stable” in 2026.
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“This is despite significant headwinds, chief among them relentless increases in the cost of doing business, which is already exceptionally high by international standards,” he said as hoteliers gathered for the annual conference of the Irish Hotels Federation in Killarney on Monday.
“This requires a renewed, national focus on cost competitiveness – both within our own tourism industry and across the wider economy.
“Thankfully, the Government’s decision to restore the 9 per cent rate of VAT on hospitality food services from July will partially offset these increases for food-led businesses operating on some of the tightest margins of any sector.”
Despite these challenges, however, the sector maintains a cautiously optimistic outlook.
A slim majority (51 per cent) of hoteliers report a positive outlook for trading conditions over the next 12 months, while 36 per cent report a neutral outlook and 13 per cent are negative.
But three quarters of hoteliers say they are concerned about the outlook for the wider Irish economy over the next 12 months, as consumer finances remain under pressure and international developments pose potential risks. More than nine out of 10 hoteliers are worried about the global economy and the potential impact of political uncertainty in key markets.
Magner said continued investment in product development remains a priority for Irish hotels.
“A focus on value-enhancing investment is essential for the future growth of our sector and tourism industry,” he said. “Hotels are examining all aspects of their operations to elevate their product, meet changing visitor preferences and achieve their sustainability goals.
“This ensures Irish tourism is positioned to deliver long-term growth as Ireland’s largest indigenous industry, supporting over 270,000 livelihoods.”
Following a period of already significant capital investment in their properties during the last four years, 75 per cent of hoteliers plan to further increase investment over the next 12 months.
Key areas of planned investment include projects involving guest bedroom refurbishment (61 per cent) and upgrades to restaurants, bars and common areas (47 per cent).
Some 53 per cent of hotels indicate they plan to increase investment in sustainability in 2026, while an additional 32 per cent indicate they are actively exploring new options to enhance sustainability.
Among those investing, key targets include renewable energy and energy efficiency (60 per cent of hotels), food waste reduction (33 per cent), and water conservation measures (26 per cent).
The survey was conducted during February with results based on responses from 217 hotels and guest houses across the country, representing a sample of 4.9 million bedroom nights in 2025 across 23,000 guest bedrooms.
With estimated annual revenues in excess of €5 billion, the Irish hotels and guest house sector is a big driver of economic activity and development, directly employing over 69,000 people.
