Hospitality: A Value Chain Analysis 2021

Labour productivity is a key economic indicator which measures output relative to labour inputs. This chapter provides an analysis of productivity in the Hospitality sector in 2021, broken out into its sub-sectors Accommodation and Food & Beverage Services.

Labour productivity is measured as output per hour worked, where output is measured as Gross Value Added (GVA) in constant prices¹. Importantly, changes in labour productivity for a sector can be explained by factors other than hours worked, such as the level of capital available to labour. For further productivity statistics on the Irish economy, see Productivity in Ireland 2021.

Figure 5.1 below shows labour productivity in 2021 for the total Hospitality sector and its sub-sectors. Labour productivity for the Hospitality sector was €21.6 per hour in 2021. Labour productivity was €28.7 per hour for Accommodation and €19.1 per hour for Food & Beverage Services in 2021.

¹ GVA values presented in this chapter are chain-linked to 2021 apart from in Figure 5.6, where GVA is presented in previous year prices for international comparability. 

Figure 5.2 below illustrates the labour productivity trends from 2017 to 2022 across the total Hospitality sector and its sub-sectors, Accommodation and Food & Beverage Services.

In the Food & Beverage Services sector, labour productivity declined between 2017 and 2020, from €21.5 to €18.6 per hour. This trend reversed after 2020, with productivity growing to €23.1 per hour by 2022.

From 2017 to 2019, labour productivity in the Accommodation sector rose steadily to €27.9 per hour. The decline to €20.1 per hour observed in 2020 reflects the reduced economic activity in the sector during the COVID-19 pandemic. This drop in labour productivity meant that output in the sector declined at a faster rate than labour hours worked. Labour productivity in the Accommodation sector grew from 2020 onwards, surpassing pre-pandemic levels to reach €38.1 per hour in 2022.

Overall, total Hospitality labour productivity experienced a decline in 2020 to a low of €19.1 per hour, followed by growth in the subsequent years. In 2021, the total Hospitality sector recovered to just below pre-pandemic levels observed in 2018 and 2019. By 2022, the sector grew to its highest labour productivity level within the period shown, reaching €27.4 per hour.

Figure 5.3 below presents the growth of labour productivity² for the total Hospitality sector and its sub-sectors from 2018 to 2022.

In the Food & Beverage Services sector, after three consecutive years of decline, labour productivity increased by 2.7% in 2021 and by 18.9% in 2022.

The Accommodation sector experienced a sharp contraction in 2020, with labour productivity dropping by 33.1%, following two years of growth. The sector saw a strong upward trend in the subsequent years, with productivity rising by 35.9% in 2021 and 28.3% in 2022.

Labour productivity for the Hospitality sector overall contracted by 13.5% in 2020. This was followed by growth of 12.7% in 2021 and 23.6% in 2022.

² Log growth rates are presented here. For more information on log growth rates, see the Background Notes of Productivity in Ireland 2021.

Figure 5.4 illustrates the trend in labour hours worked within the Hospitality sector, broken down by sub-sector, from 2017 to 2022.

In the Food & Beverage Services sector, hours worked dropped from 191 million in 2019 to 106 million in 2020. While the sector saw steady growth in labour hours after 2020, reaching 172.5 million hours by 2022, it had not yet returned to pre-pandemic levels.

The Accommodation sector followed a similar pattern, with hours worked declining from 83.7 million in 2019 to 48.9 million in 2020. After further decline in 2021, hours worked in the sector grew to 69.7 million hours in 2022, still below pre-pandemic levels.

Figure 5.5 below shows the trends in Gross Value Added (GVA) at constant prices³ for the Hospitality sector from 2017 to 2022, broken down by sub-sector.

In the Food & Beverage Services sector, GVA remained relatively stable at around €3.7 billion in 2018 and 2019. In 2020, GVA dropped to just under €2 billion, reflecting the effects of the COVID-19 pandemic in Ireland. By 2022, the sector experienced strong growth, with GVA rising to just under €4 billion, surpassing pre-pandemic levels.

For the Accommodation sector, GVA declined from €2.3 billion in 2019 to just under €1 billion in 2020. As with Food & Beverage Services, GVA for Accommodation rebounded in 2021 and 2022, reaching a high of €2.7 billion in 2022.

³ Chain-linked to 2021. For more information on chain-linking, see Statistics Explained.

Figure 5.6 below shows total Hospitality labour productivity across EU countries in 2021⁴. Ireland reported the tenth highest value for labour productivity in the hospitality sector among EU members. Belgium reported the highest value for labour productivity in the Hospitality sector, while Bulgaria reported the lowest. 

Note that Ireland's labour productivity is calculated differently here to the rest of this chapter to ensure international comparability. Labour productivity in Figure 5.6 is calculated using GVA in previous year prices rather than chain-linked GVA. 

⁴ Note that these results present the latest estimates for Ireland using sub-sector specific price indices from CSO Enterprise Statistics.