An Oireachtas committee has heard that the use of tourist accommodation for the housing of displaced Ukrainian citizens and international protection applicants could cost non-accommodation tourism providers over €1.1 billion in lost revenue this year.
According to an opening statement delivered by Fáilte Ireland to the Joint Oireachtas Committee on Tourism, Culture, Arts, Sport and Media, almost a third of all registered tourism stock outside Dublin is now contracted to the State.
In the written statement circulated to committee members in advance of the hearing, Paul Kelly, chief executive of Fáilte Ireland, said the lack of availability of tourist beds means activity providers, visitor attractions and many in impacted areas will have their business survival "put at significant risk".
He added that the lost revenue will be a real loss as inbound agents have said many visitors who want to come to Ireland are now booking other countries simply because they cannot find accommodation in Ireland.
The sector "desperately" needs as much tourism accommodation stock as possible returned to tourism as quickly as possible, he wrote.
"In addition to the short-term business loss and the long-term consequences for the quality of some rural tourism destinations, this situation also creates conditions that facilitate pricing practices that put Ireland's long-term reputation at risk," Mr Kelly added.
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"Particularly in Dublin where there was already an underlying shortage of tourism accommodation," he said.
"Fáilte Ireland has no role or remit in price setting regulation, these are commercial decisions by individual businesses based on the costs that need to be recovered and the balance between supply and demand," he added.
Mr Kelly also warns that the increased frequency and scale of accommodation price spikes is damaging the sector’s reputation here and internationally.
He says he conveyed a message to providers in December asking them to consider the long-term value for money reputation of the country when setting prices.
"I repeated this message at Fáilte Ireland’s recent industry information events, which were attended by over 2,000 industry members and again at the Irish Hotels Federation conference earlier this month," he explained.
Mr Kelly also cautioned that the lack of availability of hire cars during the summer season is another challenge facing rural tourism, with the fleet likely to be well below the level needed to meet demand this summer.
"Independent analysis indicates that the discontinuation of the repayment of VAT on VRT Scheme in 2019 resulted in increased costs for car rental providers and their customers ranging from €50 to €250 per week," he claimed.
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"This is acting as a significant commercial disincentive to restocking the seasonal fleet and leading to high peak season prices for those who can secure a hire car and a loss of potential visitors simply because some cannot secure a hire car."
However, overall Mr Kelly stated that there is optimism that the coming summer tourism season will be strong.
Speaking on RTÉ's Six One News, he said: "If there is no bed to stay in, there isn’t a visitor, they won't eat in the restaurant, go to the visitor attraction or hire the kayak or go to the cycle hire shop.. Those downstream businesses who rely on the visitor being in that town."
He said that for every 1 euro a visitor spends in accommodation, they spend 2.50 in other business in other sector.
Mr Kelly added that hoteliers would make commercial decisions and you can’t criticise those who have chosen to house refugees and asylum seekers to have year-round business instead of a five or six month season.
'Minority' of hotels engaging in price gouging, ITIC says
Fianna Fáil Senator Shane Cassels said he feared that industry representatives were trying to prepare the ground for continued price increases.
Eoghan O'Meara Walsh of the ITIC said that a mixture of increased costs and a shortage of beds was going to impact the price of hotels.
He added that a significant proportion of hotel beds were being used to accommodate refugees.
He said that he cannot influence prices, but he would hope that the industry would offer value for money for customers.
Mr Cassels said that it would not be fair for the sector to lobby for a continued VAT reduction of 9% later this year, while at the same time some hotels in the sector continued to charge excessive prices.
ITIC's Chair Elaina Fitzgerald Kane, the owner of Fitzgerald's House Hotel and Spa in Limerick, said that it was unfair to "brandish" all hotels with the same stick.
She insisted that it was only a minority of hotels that engaged in price gouging and that there were many hotels offering rooms below average rates.
Christopher O'Sullivan TD of Fianna Fáil asked the Irish Hotels Federation if it had written to Dublin members, requesting that they desist from price gouging.
IHF's CEO Tim Fenn explained that the federation had no role in pricing, however he said that IHF did write to members to outline the concerns being expressed by the Oireachtas Tourism Industry on this issue previously.
Niall Gibbons, CEO of Tourism Ireland, told members that there would likely be insufficient hotel space available over the summer period.
Mr Gibbons said that there was significant pent up demand.
Tourism sector 'should not be primary provider of accommodation'
Chief Executive of the Irish Tourism Industry Confederation said the tourism sector should play its part in a humanitarian response to refugees but that it should not be the primary provider of accommodation.
Speaking on RTÉ's Morning Ireland, Eoghan O'Mara Walsh said the current situation, whereby hotel and B&B accommodation is being used for refugee accommodation, is having a very negative knock-on effect for other tourism businesses.
Mr O'Mara Walsh said "downstream" tourism businesses, like attractions, restaurants, shops and cafes are suffering and losing out on "the tourism dollar".
"This is of great concern," he said.
"You will unfortunately be facing a situation this summer, where tourism towns up and down the length and breadth of the country will have a shortage of tourism beds and therefore there will be very little tourism activity. The accommodation providers will be okay because they will get remuneration from the government of a certain level. But the downstream tourism businesses will be the ones that suffer."
Mr O'Mara Walsh said that around 12% to 15% of bedrooms should be allocated to refugees and asylum seekers but that the Government needs to be more comprehensive in terms of other types of accommodation.
There is an onus on the Government to be more creative and balanced, he said.
Additional reporting by Tommy Meskill
