Hospitality industry 'at a crossroads' coping with increased costs and staffing challenges
'Additional cost-saving measures, such as offering live-in positions, closing on select days, simplifying menus, and embracing automation, are expected to become more prevalent.'
The hospitality sector has seen an increase of ‘cash in hand’ payments as businesses struggle to cope with increased overheads and competition for staff.
Excel Recruitment’s Hotel & Catering Sector Salary Guide for 2025 has found some establishments forced to consider this practice as a means of holding on the key workers. As the minimum wage rises to €13.50 per hour in January 2025, it adds further to increased sick pay, PRSI contributions, and pension requirements.
Excel found that businesses in the sector are increasingly relying on staffing agencies and automation to balance rising costs with customer expectations, and predicts adjustments in wages for entry-level and supervisory roles, while management salaries remain mostly unchanged. “The hospitality industry is at a crossroads,” said Shane McLave, Managing Director at Excel Recruitment.
“With anywhere between 600 and 700 hospitality venues closing in the last 12 months alone, it’s not a surprise that just about everyone we meet in this sector is concerned about its sustainability. Businesses are being forced to make difficult decisions to survive, which has significant implications for both employees and customers.”
To adapt, many businesses are implementing leaner management teams and reducing salary gaps between positions. “Additional cost-saving measures, such as offering live-in positions, closing on select days, simplifying menus, and embracing automation, are expected to become more prevalent.”
The recent Fáilte Ireland Tourism Barometer, based on responses from over 1,000 operators across the country, found that 24% of businesses have had more customers this summer, compared to last summer, while 23% maintained similar levels. Fáilte Ireland noted that a number of factors have combined to make a ‘disappointing summer’, including bad weather — cited by 51% as a concern, while 46% noted the cost of tourist accommodation.
The research indicates that the food-and-drink sector has struggled the most, with 68% receiving fewer customers this summer than last. While 19% of operators expect business during the remainder of the year to be up on the same period last year, 50% expect it to be down.
On the upside, Failte Ireland found that recruitment and retention in the tourism sector has become less difficult for the third year in a row. The number of employers in the sector reporting considerable difficulty in recruiting chefs has fallen from 88% in 2021 to 54% this year. Similarly, while 62% said they could not recruit waiting staff three years ago, that has fallen to 17% today.
“It’s encouraging to see the progress our sector has made in creating appealing workplaces and narrowing the gap in recruitment and retention since 2022,” said Jenny De Saulles, Director of Sector Development at Fáilte Ireland.
“However, we must keep building on this momentum. In a competitive labour market, it’s clear that there’s no room to ease up — businesses need to keep innovating, listening to their employees, and striving to make tourism a sector of choice for long-term, meaningful careers.”
