Over-reliance on tourist accommodation could affect hotel prices, revenue and tourism jobs next year, industry leaders say
More than one in five tourist beds in Ireland is now contracted by the State, an Irish Tourism Industry Confederation (ITIC) report has revealed.
If the reduction of room stock for visitors continues at the current rate, guests could end up paying more for accommodation next year and the industry could lose up to €1bn in earnings, it adds.
"Currently 22pc of the country’s tourist accommodation capacity, including 15pc of hotel rooms, is contracted to provide shelter for those fleeing Ukraine, plus around 5,000 asylum seekers from other countries,” ITIC claims.
Figures are particularly high outside Dublin, the report says, with over 40pc of tourist accommodation in Co Kerry and “half of all tourist accommodation in Co Donegal” contracted to cater for refugees.
ITIC’s CEO, Eoghan O’Mara Walsh, said: “We very much support the generous humanitarian approach the Irish government has, and we feel the broader tourism economy should absolutely be playing its part in dealing with this crisis.
“But we just can’t be the primary accommodation provider. Otherwise the whole situation will have unintended consequences that will lead to serious economic harm for the industry.
“There will be a complete lack of demand and supply equilibrium. Prices unfortunately will just go up."
Visitor accommodation prices in Ireland are already being driven up by factors like rising costs and staffing challenges, ITIC says. Its report says Dublin’s average daily hotel rate rose by 23pc in September compared to the same month in 2019.
Further increases due to limited supply “run the risk of damaging Ireland’s competitiveness and prolonging recovery from the pandemic shutdown,” it adds.
ITIC is a representative group for Ireland’s tourism industry, with members ranging from DAA to Aer Lingus, publicans and the Irish Hotels Federation.
Its report on the impact of the conflict in Ukraine on Irish tourism was published in November.
Irish hotels, B&Bs and other businesses choosing to house people fleeing war and persecution are paid to do so.
Around €440m is expected to be spent on such accommodation by the end of 2023, according to the Department of Children, Equality, Disability, Integration and Youth, which is managing Ireland’s response.
More than 650 accommodation contracts have been put in place “accounting for over 38,900 beds in hotels, hostels, commercial self-catering accommodation and certain emergency or repurposed settings”, it said.
A department spokesperson said it has had “very good support from the hotel sector in 2022, even during the tourist season”.
Last week, Green Party leader Eamon Ryan compared private hoteliers and B&Bs who are taking in Ukrainian refugees fleeing war to Good Samaritans providing “an important service”.
However, Mr O’Mara Walsh said that although hotels are being paid in a commercial arrangement, there could be “broader consequences” to a shortage of bed stock for tourism next year.
Fáilte Ireland research has shown that for every €1 visitors spend on accommodation, €2.50 is spent on other services, he said. “It’s the downstream businesses – the tourist attractions, the restaurants, the pubs, the tour guides, the culture companies – that will suffer.”
If 30pc of tourism accommodation stock becomes contracted to the State, ITIC’s report claims, then the cost could be up to €1bn in lost earnings to the sector.
The Government has been struggling to deal with Ireland’s housing crisis and to accommodate what is expected to be over 70,000 Ukrainian refugees by the end of the year.
Ireland is already accommodating “over 65,710 people between those fleeing Ukraine and international protection applicants”, a Department of Children spokesperson said.
"This includes 48,070 Ukrainian people who have sought accommodation from the State and 17,645 international protection applicants currently in IPAS [International Protection Accommodation Services] accommodation.
"Our response has involved constant contingency planning, the deployment of imaginative solutions and a vast ongoing operational exercise.”
Recent efforts include a revamping of the pledged accommodation appeal through the website, OfferAHome.ie, and the planned construction of modular homes.
ITIC is not proposing a cap on the number of refugees and asylum seekers arriving into Ireland, Mr O’Mara Walsh said.
But it says an urgent and “more balanced” effort to address the situation is required, starting with a “Department of the Taoiseach-led approach”.
A two-year “humanitarian plan” should include the fast-tracking of other accommodation sources and a business continuity fund for affected tourism businesses, among other measures, it adds.
A “fair allocation” of tourism stock towards housing refugees and asylum seekers would be 12 to 15pc, ITIC says.
The Department of Children spokesperson said it had engaged “a whole-of-government response” on the accommodation crisis, and meets weekly with representatives of the Department of Tourism and Fáilte Ireland “to monitor these matters”.
“We will continue to engage with stakeholders across this sector, and hope for the continued support as needed.”