Mr. Paul Kelly:

There are currently 22,300 rooms in Dublin that are registered with Fáilte Ireland. Between this year and next year, the pipeline is for an additional 3,500 rooms coming on stream, which is a significant 10% to 15% increase in the number of rooms, which is desperately needed. However, it is not enough and, in the long term, we will need more, as we have said time and again. It is a four- to five-year timeframe from when someone starts the process to when they open a hotel room. It is sometimes shorter if it is an extension and so on, but, generally, that is the timeline. It is very important that the approach that is taken facilitates that long-term development.

That is around looking at costs and giving businesses certainty, and it is around making sure that the developers and investment companies which are looking at investing can see that they can get a good return in Dublin, which is a higher-cost economy. It costs more to build a hotel in Dublin than almost anywhere else. It costs more to get money to build a hotel in Ireland than almost anywhere else in Europe. We are a high-cost economy so we have to make sure that those investors can get a return on investment.

The Senator is right that it is not just about tourism, and it is about business, about multinationals being able to have their staff coming over and back to Ireland, and about all of the other community needs that are serviced. As I said to this committee only in April, housing displaced citizens and asylum seekers in short-term accommodation is not good for them and is not good for tourism. As Mr. Fenn outlined, 17% of the accommodation stock has come out of Dublin to serve that purpose, for very valid reasons, including very important humanitarian reasons, and what we are seeing now is some of how it is not good for tourism. That is just one of those unintended consequences. There is more supply coming but we need even more supply again.

People speak about the VAT rate. Investors look at this. An increase in the VAT rate from what is in line with the European average and the competitors we are dealing with would not encourage more developers. It would put off developers. Given the current supply constraint we have, the likelihood is that any VAT increase would not decrease prices but increase them because once again it comes down to competition. We have to be realistic.

Mr. O'Mara Walsh made a point on the tourism economy. Revenue in hotels in Dublin represent 15% of the tourism economy. The other 85% of the tourism economy is revenue outside of hotels in Dublin. It is very important that blunt instruments that would impact towns, villages, businesses and viability are not used. This is before we even get to hairdressers and other services that are not connected. There is a core issue. It is easy to go for short-term fixes, but this is about building supply and facilitating and creating the conditions that will bring more investment and more hotels.

With regard to full hotels, it is very challenging when we have high prices. People are working in shops, cafes, restaurants and bars throughout Dublin who are delighted that the hotels are full. The offices are not full. It is very important that we do not lose sight of the broader economy. Full hotels have a benefit for the wider economy. We would prefer if they were not as full as they are. We would prefer them to be a little bit emptier so there is more competition and price competitiveness in the market. It is important that we bear in mind the positive economic benefit outside of that.