Soaring energy prices pose the biggest concern to the hospitality sector, according to a new report commissioned by the Drinks Industry Group of Ireland (DIGI).
The report, researched, and authored by Dublin City University (DCU) Associate Professor Emeritus and economist Anthony Foley, shows that spiralling food and energy costs have taken its toll on the sector, with businesses facing a serious and sustained rise in costs.
"The economic turbulence in the hospitality sector is clear," Professor Foley said.
"Severe inflationary pressures on core costs mean we are looking at a crisis situation across much of the sector.
"Survival over the next six to 12 months will be the goal for many in the sector, with ever tightening margins a reality for most," he added.
The report shows that all hospitality businesses are experiencing soaring cost increases across food products.
It reveals that meat products are up 8.1%, while poultry products are up 11.3% and dairy products are up 50%.
The report shows that energy price increases for businesses have exceeded household increases in many cases.
Non-household electricity prices in Ireland were found to be 60% higher than the EU average in the second half of 2021.
The differential was even more stark with gas prices, with business gas users experiencing rises of more than double those of households.
"The findings of the report are very distressing and alarming for the hospitality sector," said Kathryn D'Arcy, Chair of DIGI.
"The findings of this research demonstrate the need for policies that reduce the costs facing thousands of businesses throughout the country," she added.
Along with most other sectors of the economy, the report states that the hospitality sector faces challenges in recruiting staff.
It states that this has already put pressure on payroll costs.
Hospitality hourly earnings were €15.45 in the first quarter of 2022, a 16% increase on the same period in 2019.
According to the report, the cost situation for hospitality will deteriorate further in the remainder of 2022 and into 2023, with additional costs rises expected in interest rates, water charges, employment taxes.
