Budget 2026: What Irish Hotels Need to Know

As we approach the end of the year and the dust settles on the Budget 2026 announcement, it’s time to review the coming changes and how the hospitality industry can prepare. 

Budget 2026 brings higher payroll costs for Irish hotels, with increases to the National Minimum Wage confirmed for 1st January 2026. While the long-discussed VAT reduction to 9% for food businesses was anticipated and welcomed, it will not come into place until July 2026 and will not apply to accommodation. 

For an industry already balancing rising costs, the focus for 2026 must now shift firmly to controlling payroll visibility, forecasting, and workforce efficiency to offset these additional costs. 

Industry Response 

Michael Magner, President of the Irish Hotels Federation (IHF) welcomed the VAT reduction for food services, describing it as “a crucial intervention for struggling food service businesses the length and breadth of the country.” 

However, he also warned that “serious cost-competitiveness issues remain” for accommodation providers, many of whom continue to face unsustainable increases in operating costs. 

The Key Changes for Hospitality for 2026 

The Government has confirmed: 

• National Minimum Wage will increase by 65 cents from €13.50 to €14.15 per hour on 1st January 2026. 

• VAT reduction for food and catering to 9% from 13.5%, starting from 1st July 2026. 

• No VAT change for accommodation. 

How Irish Hotels Can Prepare and Respond 

Hotels can take proactive steps to protect profitability in the face of rising workforce costs: 

• Gain real-time payroll visibility: using costed rosters and tracking wages as a percentage of revenue. 

• Optimise workforce planning: matching workforce levels to occupancy and demand. 

• Benchmarking: comparing to competitors to evaluate your position in key metrics. 

These actions allow hotels to stay agile in the face of rising payroll costs and that’s where technology plays a key role. 

How Alkimii Helps Hotels Control Payroll Costs 

Alkimii People equips Irish hotels with both the tools and processes to manage workforce costs in real time, giving operators the insight they need to make smarter, faster decisions. 

1. Payroll Prediction 

• Compare forecasted payroll with actual wage spend daily to spot cost overruns early and prevent unnecessary overspend. 

• Set payroll percentage targets by department. 

• Monitor daily variances and control labour costs while maintaining service quality. 
  

2. Smarter Rostering 

• Align workforce levels with forecasts. 

• Reduce unnecessary labour spend during quieter periods. 

• Create fair, transparent schedules that support employee satisfaction. 

3. Workforce Data in Real Time 

• Benchmark payroll performance across sites and the competitive market (including your county, region, hotel category, nationally, and more). 

• Identify seasonal trends using date range filters and plan ahead. 

• Make confident, data-led workforce decisions. 

Building Resilience and Offsetting Costs in 2026 

For hotels, Budget 2026 confirms that workforce cost pressures will continue to rise and the increase in the minimum wage will continue to test margins in every department. 

However, with the right systems in place, hotels can stay in control. Data-driven visibility into payroll performance and utilising costed rosters gives operators the power to adapt quickly, maintain service quality, and protect profitability. 

For more information, please visit https://www.citizensinformation.ie/en/money-and-tax/budgets/budget-2026/. 

Request a demo and see how Alkimii can help your hotel can navigate rising payroll costs in 2026 and beyond.