JOC Opening Statement - Paul Kelly on Challenges Facing Tourism Accommodation Providers

JOC Opening Statement - Paul Kelly on Challenges Facing Tourism Accommodation Providers

Joint Oireachtas Committee on Tourism, Culture, Arts, Sport and Media

‘Challenges Facing Tourism Accommodation Providers’

Opening Statement – Paul Kelly, Chief Executive Fáilte Ireland

29th March 2023

Cathaoirleach, Members thank you for your invitation.

When I appeared here in April and December last year, I expressed our view that housing displaced Ukrainian citizens and international protection applicants in tourist accommodation is not a good solution for them or for tourism and stressed the importance of finding as many better alternative solutions as possible and as quickly as possible.

32% of all registered tourism bed stock outside Dublin is now contracted to the State and is not available to tourists, this means that activity providers, visitor attractions and many in impacted areas will have their business survival put at significant risk.

We estimate that this will cost the non-accommodation tourism sectors over €1.1billion in lost revenues this year. This will be a real loss as we know from inbound agents that many visitors who want to come to Ireland are now booking other countries simply because they cannot find accommodation in Ireland.

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. Particularly in Dublin where there was already an underlying shortage of tourism accommodation. 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.

The increased frequency and scale of price spikes in the accommodation sector is damaging the sector’s reputation both nationally and internationally and I wrote to all registered accommodation providers in December asking every business to consider Ireland's long-term value for money reputation 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.

Another challenge facing the rural tourism economy is the lack of availability of hire cars during the summer season. 20% of all overseas tourists to Ireland rent a car and these visitors stay longer and spend more, particularly in rural areas. The car rental fleet is likely to be well below the level required to meet demand again 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. 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.

In conclusion Cathaoirleach we are optimistic that this season will be strong but I have to reiterate that the long-term wellbeing of our tourism economy and in particular the rural communities that rely on it, desperately need as much tourism accommodation stock as possible returned to tourism as quickly as possible and for the pre-2019 VAT on VRT Repayment Scheme to be re-instated.

Go raibh maith agaibh.

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