A quarter of businesses in the “experience economy” are less confident than they were six months ago, new research has found.
A similar proportion of firms indicated they expect conditions to be poor over the next six months.
The experience economy includes hospitality, retail, travel, food, drink, tourism, entertainment, the arts and events.
The survey of 328 firms, conducted by employers’ organisation Ibec, also found 25% of respondents expect their turnover to decline.
Over 70% said they have the same or are more confident about their business than they were six months ago, when similar research was last conducted.
Energy, inflation and competitiveness, and the cost of labour were identified as being the top three risks.
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“The top risks that we saw were around energy costs, inflation and the impact of competitiveness – and then, clearly, the cost of labour as well,” said Sharon Higgins, Executive Director, Membership and Sectors in Ibec. “These have been rises upon rises, and ultimately compound and become more and more difficult for businesses to manage.
“When we see a quarter of businesses seeing these kinds of issues ahead is it very worrying.
Just 17% said they have plans to implement sustainability related initiatives in the next 1-2 years, despite three quarters of respondents agreeing it is a priority.
Digitalisation is a priority for just 14% and less than half of this cohort intend to introduce related projects in the coming 1-2 years.
“Companies are dealing so much in the day-to-day and really trying to deal with these competitiveness issues that they’re dealing with, that they really aren’t getting an opportunity to look at what investment is required for the future,” Ms Higgins said. “That’s very dangerous for us, because for Ireland this economy is absolutely critical.
“The level of investment across sustainability, digitisation and training that we’re seeing the smaller SMEs is worrying and we really need to support them.”
To address the challenges in the sector, Ibec wants the Department of Enterprise to have strategic oversight and responsibility for the development and delivery of a holistic strategy for the entire sector.
It also wants the Government to better coordinate labour market regulation and cost factors and limit any further cost competitiveness measures that could threaten business viability.
It also wants details of the €250m SME support package announced in the budget, amid concerns it may not be sufficient.