Oireachtas Joint and Select Committees
Wednesday, 15 June 2022
Joint Committee on Tourism, Culture, Arts, Sport And Media
Rising Cost of Tourist Accommodation: Discussion
Mr. Paul Kelly:
I thank the committee for the invitation. As the national tourism development authority, Fáilte Ireland’s role is to support the long-term sustainable growth of this vitally important industry. Specifically on accommodation, we are responsible for ensuring that accommodation quality standards meet visitor needs. Commercial decisions such as pricing are the sole responsibility of business owners. We have no role in the setting of prices in accommodation or in any other tourism business.
In this context, I want to provide Members with our analysis of the current situation. Four years ago, Fáilte Ireland advised that Dublin required at least 1,100 more hotel rooms in addition to the 5,000 extra bedrooms that were in development at that time. The distorting effect of the pandemic makes it too difficult to robustly analyse the long-term supply versus demand needs currently but it is abundantly clear that we still require more hotel rooms to meet the city’s diverse needs for short-term accommodation. Hotel occupancy in Dublin is now one of the highest in Europe, driven by a range of factors, some of them short-term. These include deferred business conferences, group tours, concerts, weddings, accommodating asylum seekers and displaced Ukrainian citizens, emergency homeless accommodation and, as has been highlighted, an exceptionally strong recovery in domestic and overseas tourism. Hotels are just one accommodation type in a situation where all accommodation is in short supply.
This excess of demand over supply combined with rapidly rising input and wage costs and a staffing and skills shortage, all after two years of massive revenue loss, has all created significant upward pressure on market pricing. As has been said, there are just over 22,300 hotel rooms in Dublin. Another 3,500 are coming on stream over the next two years. We need these new rooms and more. We must have a capital city that can cater for all types of visitors with quality and value choices to suit different budgets. Fáilte Ireland for some years now has been trying to encourage both positive conditions for development and the development of hotels in Dublin through sharing our evidenced-based analysis and through our role as a prescribed body in the planning process.
Ireland is not a low-cost destination, but it is seen as a good value destination because consumers have found the quality received was worth the price they have paid.
In recent years our value-for-money score has been positive and consistent, with about 8% saying they got poor value for money and 80% reporting having received good value for money. Early indications suggest, however, that those scores are likely to worsen over the summer. The industry needs to be very much conscious of Ireland's reputation as a good-value destination. If that reputation is damaged, it will take time to recover. We continue to share our research with the tourism industry and to encourage it to be mindful not just of the revenue of today but also of our reputation for tomorrow.
With most challenges there is also opportunity, and the opportunity in this challenge is to grow the tourism economy in developing regions. This summer we will put unprecedented levels of marketing support into developing tourism destinations such as Cavan, Monaghan, Louth, Offaly and many others. We are also diverting our support into promoting autumn and winter holidays, where more capacity and better value will be available.
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