A new survey of hospitality operators across Northern Ireland conducted by CGA by NIQ has found that 92% believe that a VAT reduction for hospitality and 69% believe the lowering of business rates bills are necessary steps for their businesses to grow. A further 86% of those surveyed cited VAT costs as their key concern for the next 12 months and 71% cited business rates.
Undertaken by industry bodies, Hospitality Ulster, UKHospitality, The British Institute of Innkeeping, and the British Beer & Pub Association, the survey was undertaken in Q2 2026 and indicates the feeling of the industry since the launch of the #VATsTheProblem campaign in July.
The effects are of VAT and business rates cost was especially pronounced when operators were asked to rank their greatest challenges for the 12 months ahead, with 49% citing government taxes and levies. The closest concern to that was employment costs, with 22% citing that as their number one concern. 71% of operators also cited the tax burden among their biggest barriers to investment in their business.
67% of respondents stated that UK Government cutting VAT would allow them to refurbish and develop their sites, with 56% stating that it would allow them to lower prices for consumers, and 48% stated that it would allow them to build cash reserves.
Cash reserves remain an acute issue for Northern Ireland hospitality, with over two-in-three operators having either no cash reserves (18% overall) or only up to six months of reserves (18% 1-3 months and 43% 4-6 months), limiting their flexibility to pivot according to market conditions. 16% of operators believe that their business at risk of failing within the next 12 months, with 2% of those stating that their businesses are at risk in the next 1-3 months. 29% of businesses are unsure.
Overall, more than one-in-three operators (35%) have made revenue behind Q2 2025 levels, with 31% stating their revenue levels are in line with those levels.
Colin Neill, Chief Executive, Hospitality Ulster, said:
“This survey makes clear just how challenging the situation is for many hospitality businesses across Northern Ireland. VAT is not an abstract issue for our members, it is a direct cost that is putting pressure on cash flow, limiting investment, and making it harder for businesses to grow.
“With 92% of operators telling us that a VAT reduction is necessary for growth, and 86% identifying VAT costs as their biggest concern for the year ahead, the message to the UK Government could not be clearer. A reduction in VAT would give hospitality businesses the breathing space they need to invest in their premises, protect jobs, keep prices competitive, and build stronger cash reserves.
“Similarly, the survey’s findings on business rates should sound a warning to the Northern Ireland Executive. With Reval 2026 paused, now is the time to act and deliver reform of the rates system that allows our hospitality sector to pay its fair share and grow at the same time. We have seen the new Prime Minister deliver rates relief for England; we now need to see the Executive do the same for Northern Ireland.
“Numerous reports state hospitality and leisure are the future of our highstreets, as unlike retail, which is undergoing a fundamental change, the challenge for hospitality is purely financial and with fair taxation could be overcome.
“Our hospitality sector is resilient, but resilience has its limits. If we want to see thriving pubs, restaurants, hotels, cafés, and visitor attractions across Northern Ireland, Government needs to act and give the sector a realistic opportunity to recover and grow.”