Mr. Eoghan O'Mara Walsh:

I am grateful for the invitation to address the committee on the subject of the rising cost of tourism accommodation. ITI, is the representative group for the broad tourism industry and our members comprise, all key stakeholders within the sector including carriers, accommodation providers, attractions, tour operators, restaurants, vintners and others.

Pre-pandemic, tourism was the largest indigenous industry and largest regional employer supporting 270,000 jobs nationally. That is where we want to get back to. The past two years have been economically harrowing for Irish tourism with estimated losses of more than €12 billion as international visitors were kept away. But for Government support and business from the domestic market, the industry simply would not have survived. Since earlier this year though, when restrictions were finally lifted, travel and tourism have bounced back strongly. The challenge now for business is delivering capacity to meet soaring demand. This is not unique to Ireland and has been seen at airports, hotels, car rental providers and hospitality businesses across the EU. Today understandably the focus is on tourism but it is important to note that many of the pressures and issues at home are mirrored abroad.

Certainly the short-term recovery of the tourism industry has been much stronger than anybody could have anticipated. A pent-up desire to travel along with consumer savings and deferred bookings have meant that demand has surged. Combined with soaring cost inflation pressures, capacity shortfalls and labour shortages, this has resulted in increased prices charged to both the domestic tourist and international visitor alike. It is only right that the spotlight is on value and retaining value is vitally important for Irish tourism’s recovery.

Today’s discussion is on the cost of tourism accommodation, which has risen sharply in recent months. It is important to start with the data. The average rate of a room in Dublin in April, the most recent month for which we have independent data, was €154, which was 16% higher than the same month pre-pandemic. A similar percentage increase is anticipated for May. This rate of increase is on a par with European city peers and this was also a month in which 12 concerts and sporting events took place in the capital city meaning many hotels were sold out.

Two principal reasons prices have risen are escalating cost pressures and an acute shortage of supply. A hotelier in West Cork recently told me about his 25% hike in insurance costs, the 40% increase in linen costs, and the doubling of his electricity bill. These cost increases and more are borne out by every independent economic study and, understandably, they will drive the cost of a room higher. There has also been a sharp reduction in tourism accommodation supply. Since the war in Ukraine, Government has taken a significant number of rooms out of the system to rightly facilitate those fleeing the conflict.

There are a number of new hotels due to open this year and next and, as supply restrictions are eased, this will alleviate pressure and moderate prices. 2022 cannot be seen as a normal year and there are concerns about the momentum of demand into next year. ITIC has estimated that full recovery will not be secured until 2026. Industry and Government must adopt a medium-term view and pursue pro-business and pro-tourism policies. Jobs, regional economic balance and Exchequer receipts are dependent on a healthy tourism industry.