Home » IRELAND TRAVEL NEWS » Irish Tourism Faces Major Decline in 2025: USA and Canada Drive Growth While Great Britain, France, and Germany See Declines, with Rising Costs and Inflation Threatening the Future of Ireland’s Industry
Published on
December 31, 2025
By: Paramita Sarkar
In 2025, Ireland’s tourism sector faced a significant contraction, with a drop in overall visitor numbers and tourism revenue. The Irish Tourism Industry Confederation (ITIC) and the Central Statistics Office (CSO) reported that the decline in European and British visitor numbers, alongside rising costs, contributed to a challenging year. However, North American markets, particularly from the USA and Canada, showed promising growth, helping mitigate the downturn. Despite these challenges, the Irish government is optimistic about a recovery in 2026, with plans for market diversification and policy adjustments aimed at revitalizing the sector. Here’s a detailed look at the tourism decline in 2025, the growing reliance on North America, and the government’s strategy to bring the industry back to growth in the coming years.
In 2025, Ireland’s tourism industry faced a dramatic downturn, with significant contraction in visitor numbers, marking a challenging year for the sector. The Irish Tourism Industry Confederation (ITIC) and the Central Statistics Office (CSO) revealed in their year-end report that the sector had a decline in overseas visitors and revenue, despite notable gains from the North American market. With a growing reliance on the United States and Canada for tourism growth, Ireland’s tourism sector faced challenges from European and British markets. But despite a slow decline, there remains hope as Ireland works to recover with government-backed strategies for 2026. Here’s an in-depth look at the state of Irish tourism, the causes behind the decline, and what the future holds for the country’s economy.
What Happened in 2025? A Declining Irish Tourism Market
Official reports show that the Irish tourism sector saw a significant decline in 2025. Overseas visitors dropped by 6%, with a total of only 6.16 million travelers visiting the Emerald Isle. This represents a 6% decrease compared to 2024, where the sector showed signs of resilience. Despite these drops in numbers, Ireland’s tourism still generated €8.89 billion in total economic value, but this figure remained mixed, as it decreased from 2024’s total. Overseas expenditure saw a 13% drop, amounting to €5.27 billion in 2025.
The number of jobs in the tourism industry held steady, with 226,800 people still employed, showing that, despite a struggling industry, Ireland’s tourism sector still provides significant employment. But the drop in revenues reflects the broader challenges facing the country’s tourism sector.
Why Did Irish Tourism Decline in 2025? The Factors Behind the Drop
Several critical factors contributed to the decline in Irish tourism in 2025. Rising costs and inflation played a significant role in reducing visitor numbers, while the tourism market’s heavy reliance on traditional European and British visitors became a growing concern.
Cost Competitiveness:
According to Eurostat data, Ireland is now the second-most expensive country in the EU, following Denmark. The country’s high prices in restaurants and hotels, 29% above the EU average, made it less attractive to many potential tourists, particularly those from traditional European countries like Germany and France.Reduced Air Access:
Another key factor was the reduction in flight capacity from Great Britain and parts of Europe, which made it harder for travelers to visit Ireland, especially for short-haul trips. This problem was exacerbated by the fact that many Irish flights are heavily dependent on connections with Great Britain and Europe.Accommodation Shortage:
Ireland also faced an ongoing accommodation shortage, with demand for tourist accommodations exceeding supply. This situation was worsened by the repurposing of some tourist properties for state and humanitarian uses, further limiting availability for tourists.Rising Inflation:
Tourism-specific inflation in Ireland reached an average of 6% annually in recent years, largely driven by increased labor, energy, and insurance costs. This inflation has made it even harder for the Irish tourism sector to remain competitive within the European market.North America’s Role in Saving the Irish Tourism Sector
Despite the overall decline, the ITIC report highlighted that North America played a crucial role in preventing a more severe economic downturn. The number of visitors from the United States and Canada increased by 4% and 8%, respectively. North America became the primary revenue driver for the Irish tourism market in 2025, with this market contributing nearly €2 billion to Ireland’s economy.
In contrast, other traditional markets like Great Britain, which remains the largest by volume, saw a 4% decline in visitors, contributing €1.61 billion to the economy. The overall decline in European markets was significant, with France and Germany both seeing drops in visitor numbers. French visitors declined by 13%, and German visitors saw an 8% drop. Nonetheless, the Continental European market remained the second most valuable for Ireland, contributing €1.73 billion.
Moreover, new and emerging markets, while not substantial in size, contributed €445 million in total to the economy in 2025, signaling potential for future growth.
What Is the Government Doing to Address the Decline in Tourism?
The Irish government and the ITIC are not standing still in the face of these challenges. They have lobbied for a return to pro-competitiveness policies, aimed at making Ireland more attractive to tourists. One of the most significant actions announced is a VAT reduction for restaurant and catering services. Starting July 1, 2026, the VAT rate for these services will be reduced from 13.5% to 9%. While this reduction does not extend to hotels or short-term rental accommodations, it signals a government effort to address one of the cost-related barriers to tourism.
Additionally, there are signs of hope for recovery in 2026, with ITIC projecting a 5%-7% revenue growth, provided global economic conditions remain stable. However, Ireland must also address issues such as the Dublin Airport passenger cap to ensure the country can accommodate the expected increase in visitors.
What Strategic Risks Could Affect Irish Tourism?
The ITIC raised a concern about the over-reliance on the U.S. market, warning that any significant changes in the USD/EUR exchange rate or a downturn in the U.S. stock market could expose the Irish economy to risk. The tourism sector’s heavy dependence on North American visitors means that a sudden shift could have devastating effects on revenue and employment in the industry.
To counter this, the ITIC is advocating for a market diversification strategy. This strategy would incentivize airlines and marketing efforts to target core European and Asian markets, ensuring that Ireland’s tourism sector remains resilient even if one region faces challenges.
What’s Next for Ireland’s Tourism Industry in 2026?
Looking ahead, the outlook for Ireland’s tourism sector in 2026 remains cautiously optimistic. Despite the challenges faced in 2025, government actions to reduce VAT on restaurant and catering services, combined with efforts to diversify markets, provide a roadmap for recovery. The ITIC projects that, with stable global conditions and improvements to air travel capacity, the tourism sector could see growth again next year.
However, the challenges of cost competitiveness, inflation, and accommodation shortages will require ongoing attention. If these issues remain unaddressed, Ireland may find itself struggling to retain its place as one of Europe’s top tourist destinations.
Conclusion: Will Ireland’s Tourism Industry Bounce Back?
The 2025 Irish tourism sector has shown a significant decline, but there are clear signs of hope. The United States and Canada continue to be strong contributors to the Irish economy, while European markets are struggling with decreasing visitor numbers. However, with proactive government policies, including tax reductions and market diversification efforts, the future of Irish tourism is not lost. The sector must adapt to new global realities, balance its reliance on North America, and capitalize on emerging markets to ensure continued success in the coming years.
As the Irish government works toward recovery, the tourism industry remains a crucial pillar of the Irish economy, and with the right policies in place, the country could well see a turnaround in 2026, making it an attractive destination once again for travelers worldwide.