One in three ‘tourism beds’ outside of Dublin unavailable due to State housing contracts

Tourism businesses outside the hotel sector face losing €1.1 billion in revenue this year due to the shortage of accommodation arising from the refugee crisis, an Oireachtas committee will be told on Wednesday.

Paul Kelly, chief executive of Fáilte Ireland, will also deliver a stark warning that price spikes are putting Ireland’s reputation at risk, while the price and availability of car hire is driving visitors away.

Mr Kelly will warn the Joint Oireachtas Committee on tourism that almost one third of all tourism “bed stock” outside Dublin is now contracted to the State and not available.

“This means that activity providers, visitor attractions and many in impacted areas will have their business survival put at significant risk,” he will tell the committee.

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Last year, Mr Kelly warned the committee that housing displaced Ukrainian and international protection applicants in Irish hotels in the long-term is not a good solution and he is set to double down on that warning on Wednesday, stating that 32 per cent of non-Dublin beds are now contracted to the State.

“We estimate that this will cost the non-accommodation tourism sectors over €1.1 billion,” he will say, with reports from travel agents who send tourists here that “many visitors who want to come to Ireland are now booking other countries simply because they cannot find accommodation in Ireland”.

The shortage of beds is interacting with existing shortages, he will tell the committee, particularly in Dublin where there was already an underlying shortage of supply, to cause severe affordability issues that endanger Ireland’s reputation. “This situation also creates conditions that facilitate pricing practices that put Ireland’s long-term reputation at risk,” he will say.

“The increased frequency and scale of price spikes in the accommodation sector is damaging the sector’s reputation both nationally and internationally,” he will say, pointing to warnings he gave to hotels in December, and again at recent industry events held by Fáilte Ireland and the Irish Hotels Federation.

He will also point to the lack of availability of hire cars during the summer - a significant issue for the rural tourism economy as a fifth of all tourists rent a car and “these visitors stay longer and spend more, particularly in rural areas”.

The car rental fleet, he will warn, is “likely to be well below the level required to meet demand again this summer”. The decision to discontinue the repayment of VAT on the VRT scheme resulted in increased costs for car rental, he said, acting as a “significant commercial discincentive to restocking the seasonal fleet and leading to high peak season prices” and the loss of some visitors who cannot find a hire car.

The latest warning comes in the wake of a letter Mr Kelly sent to accommodation providers last December, when he told them that “the reputation of the sector and the country as a destination will continue to be under intense scrutiny in 2023″ and that the reputation “can be directly and adversely affected by the pricing policies and decisions of individual businesses”.

He said that price spikes around concerts and sporting events result in “public and political anger and damaging national and international media headlines”, and promised that Fáilte Ireland would have a “renewed focus” on monitoring compliance with rate cards - known as the “Scale of Charges”.

“Should we find room charges being advertised which exceed those submitted, these will be published on the Fáilte Ireland website with the name of the property, the submitted charge and the advertised charge,” he warned.

Changes planned for this year, he told hoteliers, will increase the fine that can be faced for exceeding these charges to €5,000.