Survey reveals no relief from cost pressures for the Experience Economy

• Ibec publishes Launches Experience Economy Survey
• 29% of businesses are less confident than six months ago
• 9 out of 10 respondents agree that sustainability is a priority for their business

Ibec, the group that represents Irish businesses, has today released their latest pulse survey on the Experience Economy, showing that 29% of businesses operating in the sector are less confident about their business than they were six months ago, while over 1 in 4 are less confident about the overall state of the economy. According to Ibec, 300,000 people work in Ireland’s Experience Economy, which contributes €4 billion to the Irish economy.

Regarding cost competitiveness challenges, the survey also revealed that 8 in 10 businesses cite the cost of labour, and 73% identify increased overhead costs as the two greatest risks to businesses within the Experience Economy ecosystem. However, business also highlight government regulation/compliance (44%) and cybersecurity (41%) as major business risks.

The survey targeted nationwide consumer-facing businesses, operating in the restaurant, bar, accommodation and retail sectors as well as the wider supply chain including food and drink. 40% of respondents were from front of house business while 60% came from the wider supply base.

Speaking about the findings, Sharon Higgins, Executive Director of Membership and Sectors at Ibec, said:

“With the school midterm break ongoing, many of us, with our families, will be enjoying Ireland’s vibrant Experience Economy.

Unfortunately, many of the businesses at the heart of this sector remain vulnerable, as the data shows. While cost pressures persist, significant progress has been made through initiatives such as the enhanced ‘SME Test,’ the new Better Regulation Initiative, and pauses in Statutory Sick Leave increases—all reflecting Ibec's advocacy efforts.

However, additional relief is still essential. As we approach an election campaign and the formation of the next government, it’s important that the next Government have a clear direction on how we continue to support vulnerable businesses and ensure that new policies do not inadvertently drive up future costs. As a business community, we will engage with policymakers to highlight ways to maximise current efforts—such as ensuring that the enhanced SME Test and guidelines are rigorously applied by all government departments to measures impacting SMEs directly or indirectly. We will also highlight additional measures, such as a PRSI rebate and how they could help offset labour costs for any business struggling.”

Key findings from the survey include:

• The top three risks identified are Inflation and Impact on Competitiveness (99%), Increased Overhead Costs (98%), and Cost of Labour (97%).
• 23% of businesses are more confident about their business compared to six months ago, while 29% are less confident , with over half of these in the accommodation , visitor attraction and restaurant/bars sector.
• 17% of businesses are more confident about the overall economy than they were six months ago, while 28% are less confident, with respondents in the retail, accommodation, restaurant/bars showing less confidence.
• 87% of businesses agree that sustainability is a priority. Additionally, 87% plan to implement sustainability initiatives in the next 1–2 years, however small businesses are still challenged with the implementation of sustainability in their businesses.
• Digitalisation is a priority for 67% of respondents, with 66% intending to introduce related projects in the next 1–2 years.
• Most businesses plan to invest in training over the next year, with internal training (85%) and external training (62%) being the preferred forms of professional development. With companies also investing in apprenticeships (28%) and internships (28%).

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

• The Department of Enterprise, Trade and Employment should take strategic oversight and responsibility for developing and delivering a holistic strategy for the entire experience economy sector.
• The introduction of a PRSI rebate for the most exposed companies most impacted by labour costs, supports provided should include increasing the top-rate employer PRSI threshold above the new living wage annually and the introduction of a temporary PRSI rebate based on the number of lower earning workers on a company’s payroll, relative to the increases in weekly labour costs which will occur in 2024, 2025 and 2026.
• This Government and the next must ensure that new policies do not inadvertently drive up costs. They need to better coordinate labour market regulations and cost factors, while limiting any further measures that would unnecessarily place businesses in a more vulnerable position.
• Government must ensure that the enhanced SME Test and guidelines will be rigorously applied by all Government departments to measures that directly or indirectly impact SMEs.