Energy, inflation, and cost of labour biggest challenges facing Experience Economy

• Ibec launches Experience Economy survey
• 25% of businesses are less confident than 6 months ago

Ibec, the group that represents Irish business, has today launched a survey that spotlights the cost of doing business as the biggest challenge for the Experience Economy. The survey targeted consumer-facing businesses in the economy mainly operating in the restaurant, bar and accommodation sector. 87% of participating businesses were located outside Dublin and almost all were Irish owned family run businesses.

25% of businesses said they are less confident about their business than they were 6 months ago and almost 1 in 4 expect conditions to be poor in the 6 months ahead. The survey also shows turnover expectations reflect business confidence with 25% expecting turnover to decline.

Speaking about the findings Sharon Higgins, Executive Director, Membership and Sectors in Ibec said

“The survey has brought to light the competitive challenges faced by businesses within this sector. The input costs due to the increases in energy, inflation cost of labour with the impending national minimum wage increases, on top of recent VAT increases along with many other input factors will make it very difficult for these businesses in the coming months. A worrying insight from the survey is that digitalisation is a priority for only 14% of businesses.

The experience economy plays a vital role in Ireland's economic landscape. It not only bolsters tourism but also significantly contributes to regional development, business investment, and talent attraction. Furthermore, it enriches the individual experiences of residents and visitors alike”.

Amongst the key findings in the survey are:

• While over 70% of businesses have the same or are more confident about their business than they were 6 months ago a significant number 1 in 4 are less confident.
• Top three risks identified as Energy (98%), Inflation and Impact of Competitiveness (90%) and Cost of Labour (77%).
• Three quarters of businesses agreed sustainability is a priority for their business. However just 17% have plans to implement related initiatives in the next 1-2 years.
• Digitalisation is a priority for just 14% and less than half of this cohort intend to introduce related projects in the coming 1-2 years.
• One third of respondents plan to invest in training in the next 12 months to encourage staff development and aid retention.

To support and further develop this important economy, Ibec recommends the following:

• The Department of Enterprise, Trade and Employment should have strategic oversight and responsibility for the development and delivery of a holistic strategy for the entire sector.
• Government needs to better coordinate labour market regulation and cost factors and limit any further cost competitiveness measures which could threaten business viability and employment.
• While we welcomed the €250 million SME support package announced in Budget 2024, the details regarding the utilisation of the package have not yet become clear. Furthermore, considering the extent of these changes coupled with ongoing external factors such as rising operating costs and inflationary pressures, there is a growing concern that the €250 million package will not adequately support all businesses struggling to grapple with these changes.

While the National Training Fund (NTF) could not be unlocked in this Budget 2024, we welcome the intention set out to find ways, including possible legislative changes to unlock the fund. Ireland cannot afford to be complacent when it comes to education, skills, innovation and productivity.