A Hospitality Ulster survey recently found 45% of all hospitality businesses in Northern Ireland were not sure if they would survive the next 12 months
The VAT differential across the island of Ireland is putting hospitality businesses in Northern Ireland under pressure, a Westminster committee has heard.
Businesses told the Northern Ireland Affairs Committee of shrinking margins during a probe into the taxation of the hospitality and tourism sectors in Northern Ireland.
Figures from the Northern Ireland Statistics and Research Agency (Nisra) suggest that over the course of 2025 the number of jobs in the hospitality sector fell by 2,000, from around 57,000 to 55,000.
Meanwhile, a Hospitality Ulster survey recently found 45% of all hospitality businesses in Northern Ireland were not sure if they would survive the next 12 months.
Selina Horshi, managing director of the White Horse Hotel in Campsie, Co Derry, told MPs said the sector is in “survival mode”.
“The reality here is pretty stark. If there isn’t some action taken, we’re all going to be watching an industry erode,” she told MPs.
“It’s a big industry, and it’s very important to Northern Ireland. It’s the fourth biggest employer. It spreads out wealth across rural and urban areas.
“It employs a lot of women. It employs a lot of young people. You can come into it whether you’re skilled. You can upskill through it. It’s got high-paid jobs. It’s got short-term jobs. It’s so hugely important to our area, and what we’re seeing already is the decline in jobs.
“What we’re seeing already is the closure of businesses, and we just can’t keep clinging on.
“Our reserves have been eaten away by Brexit, by coronavirus by cost of living, by cost-of-doing business crisis. It has just got to an unsustainable point.”
Ms Horshi also highlighted the challenge of competing against hospitality organisations in the Republic of Ireland.
“We’re marketed alongside them, and yet a customer is looking at a price in my hotel, three and a half miles from the border, and the price in Donegal, and what they’re seeing is that the price is lower in Donegal.
“Our costs are roughly equivalent, but our VAT, for example, is significantly different. So for every £100 that I take into my business on accommodation, the equivalent hotel in the Republic taking £100 would retain £4.78 more on the VAT alone. Per room that doesn’t sound like a lot, but we are a high volume, low margin industry, and that quickly adds up to hundreds of thousands of pounds within a business each year.
“The margins have been so squeezed on all sides of the border and all parts of the UK by the cost of living and the cost of doing business, but that VAT differential is really putting pressure on our businesses at the moment.”
She added: “It’s not only VAT.
“In other parts of the UK, there has been rates relief for hospitality, and those haven’t been implemented in Northern Ireland. So that is also a challenge.
“But the one that is the biggest lever is quite simply the VAT differential when you’re looking at food at 9% in the Republic versus 20% in Northern Ireland, and you’re looking at accommodation at 20% in Northern Ireland versus 13% in the Republic.”
Michael Cadden, chairman of Hospitality Ulster and managing director of Lusty Beg Island Resort in Co Fermanagh, said he has been in the business for 25 years, and it has “never been more difficult”.
He gave an example of last year attending a major wedding show in Dublin, and leaving having sold just two weddings, whereas previously he would have have sold up to 25 weddings at the same event.
“The difference has become price. We’re no longer seen as a value proposition, and we’re no longer seen as a value proposition because we simply can’t afford to compete with the prices because our cost base and our tax base is so very, very different,” he told MPs.
He explained that there are multiplying pressures which are leaving it “unsustainable”.
These include a 1 or 2% additional food cost as a result of Brexit, the impact of the national insurance increase on their wage bill, and reaching a “ceiling” in terms of what they can charge for products due to the “relatively low income level in the province”.
“So we’re being squeezed from both sides, and the VAT lever we believe is the one that will relieve that across the board,” he added.
“We have reached a point where the levers that that we’re talking about, we believe it’s now time to start pulling those, or we will start to lose a significant portion of the industry.”
For all the latest news, visit the Belfast Live homepage here and sign up to our daily newsletter

You must be logged in to post a comment Login