Hospitality chiefs have warned that the incoming Government must ease the pressure on small businesses – or face a year of restaurant closures.

CEO of the Restaurant Association of Ireland (RAI), Adrian Cummins, said election promises to reduce the VAT rate for hospitality must be made good on.

Following a number of high-profile restaurant closures in 2024 – many citing rising costs as the cause – the Portumna native said the new government, once formed, must prioritise small- and medium-sized indigenous enterprise which he described as “the bedrock of Irish society”.

Much of last year was spent campaigning for a reduction in VAT for hospitality, the rate having reverted to 13.5% from 9% – a special lower rate which was introduced temporarily in 2020 to deal with the effects of Covid.

However, in a plea to the incoming governing parties, the RAI along with other tourism-related industry representatives, have sought the 11% proposed by Fine Gael in addition to measures to reduce Employer PRSI.

“Half a loaf is better than no loaf at all,” said Mr Cummins. “But if it is 11%, there must be a reduction in PRSI to make up the difference.”

The impact of a second-term Trump presidency in the US was the great unknown, he said, and every effort must be made to protect small-scale Irish business, given that foreign direct investment (FDI) could well decline due to the incoming American administration’s protectionist tendencies.

“We’re heading into unchartered waters with Trump and we don’t really know what he’ll do with FDI. I don’t think we’ll lose a huge number of companies that are already here because they have bricks-and-mortar commitments, but I don’t think we’ll have as many looking to come here.

“That is why it is going to be so important to support small and medium indigenous enterprises. Not every community or village will have an IDA factory but you can be damn sure there are opportunities for SMEs there,” said Mr Cummins, who is seeking a Seanad seat in the ongoing elections for the Upper House of the Oireachtas.

Efforts by the outgoing government to separate pubs and restaurants from hotels under the tourism umbrella needed to be abandoned, he added, and he reiterated calls for tourism and hospitality to be placed within a “government department with an economic portfolio in the form of a reconfigured Department of Enterprise, Tourism, Trade and Employment”.

“Business owners in all of these businesses are trying to work together – and they are all in tourism. They’re all part of the same eco-system.

“Nobody can tell me that a restaurant in West Connemara is not part of the tourism industry. That policy is a complete and utter joke,” said Mr Cummins.

He was also critical of local authorities, including Galway City and County Councils, who increased commercial rates in their budgets before Christmas.

“I can’t understand why councillors are putting small and medium businesses under further pressure with rates increases. It is very hard to keep reducing the margins,” he said.

Staffing remained a challenge, said Mr Cummins, and while recruitment and availability of workers was not as big an issue as before, securing staff with key skills was difficult.

“The difficulty is trying to get skilled workers. There is no doubt that we lost a lot of good skilled people to other industries following the pandemic,” he said.

Pictured: Adrian Cummins…warning.