Mr. Paul Kelly:

I thank the committee for the invitation to attend. When Fáilte Ireland last appeared before the committee in June to discuss this matter, I informed members that our remit in this area is to ensure that accommodation quality standards meet visitor needs and that commercial decisions on pricing are the responsibility of individual business owners. These pricing decisions are driven by a combination of factors, including the costs that need to be recovered and the competitive price the market will bear based on the balance between supply and demand. Since June, unfortunately, the position in respect of both these factors has deteriorated. As was highlighted, input costs have increased at an unprecedented rate and the amount of tourism accommodation being used for humanitarian needs by the Government is also at an unprecedented level. Both these factors mean we are likely to see significant increases in tourism accommodation prices continuing into 2023.

I will speak to the accommodation supply issue. When I appeared before the committee in April, I expressed our view that housing displaced Ukrainian citizens and asylum seekers in short-term tourist accommodation is not a good solution for them or for tourism. Tourism is a complex symbiotic ecosystem where lots of different types of businesses rely on each other. When accommodation stock is taken out of the market, it brings with it a multiplicity of challenges, and not just the rising cost of accommodation. For every euro visitors spend on accommodation, they will spend €2.50 in other parts of local economies, such as local cafés, shops, galleries, restaurants, visitor attractions and activity providers. When accommodation is removed from a locality, the survival of many of these other businesses in that locality is put at significant risk. Fáilte Ireland and many other public and private sector stakeholders have worked hard to create an attractive tourism product throughout the country to provide employment and build better places to visit and live in. The removal of hotel stock from these areas threatens to undo much of that work.

Moving on to the pricing issue, we are seeing an increase in the frequency and scale of price spikes in the accommodation sector, often coinciding with concerts and sporting events. These price spikes lead to both reputational damage of the sector within Ireland and damage to Ireland’s reputation globally for offering value for money. In this context, and in the context of the new short-term letting legislation, I will write to all registered providers of accommodation to inform them that Fáilte Ireland will have a renewed focus on compliance with their submitted scale of charges in 2023. In this letter, I will ask every individual business to consider the wider implications of its price-setting models and remind them that we know from bitter experience that if Ireland's reputation as a good-value destination is damaged it will take many years to recover. While a reduction in the available supply creates the condition for price rises, prices only rise because individual businesses make the decision to put their prices up. All businesses need to be cognisant of the long-term impact of excessive pricing.

I reiterate that in the context of the long-term well-being of our tourism economy, and the communities that rely on it, we desperately require that as much of the tourism accommodation stock as possible be returned to tourism use for the 2023 season.