Joint Committee on Tourism, Culture, Arts, Sport and Media debate -
Wednesday, 29 Mar 2023

Challenges Facing Providers of Tourist Accommodation in Ireland: Discussion

An Leas-Chathaoirleach

We have received apologies from Deputies Mythen and Smyth. I am obliged by another commitment to be absent from the meeting for a time. Is there any objection to me nominating Deputy Ciarán Cannon to take the Chair in my absence? Is that agreed? Agreed.

Today's meeting has been convened for the purposes of a discussion with representatives from the Department of Tourism, Culture, Arts, Sport and Media, from Fáilte Ireland, from Tourism Ireland, from the Irish Tourism Industry Confederation, ITIC, and the Irish Hotels Federation. I welcome all of our witnesses, those who are with us here through Microsoft Teams and those in committee room 1. From the Department, I welcome Mr. Cian Ó Lionáin, assistant secretary, and Ms Orlaith Gleeson, principal officer. From Fáilte Ireland, I welcome Mr. Paul Kelly, the chief executive officer, and Mr. Caeman Wall, head of economic and industry analysis. From the Irish Tourism Industry Confederation, I welcome Mr. Eoghan O’Mara Walsh, chief executive officer, Ms Elaina Fitzgerald Kane, chairperson, and Ms Ruth Andrews, chief executive officer of the Irish Tour Operators Association, ITOA. Ms Andrews is attending remotely via Microsoft Teams. From the Irish Hotels Federation, I welcome Mr. Tim Fenn, chief executive officer and Ms Denyse Campbell, president. From Tourism Ireland, I welcome Mr. Niall Gibbons chief executive officer. This is Mr. Gibbons' last week with Tourism Ireland. Today will be his final appearance before the committee. I wish to take this opportunity to thank Mr. Gibbons for his immense contribution to tourism across the island of Ireland during his career.

The format of the meeting is such that I will invite our witnesses to deliver their opening statements, the time for which is limited to five minutes. The opening statements will then be followed by questions from members of the committee. Before I invite our witnesses to make their opening statements, I must explain some limitations in relation to parliamentary privilege and the practices of the Houses around references that witnesses may make to other persons in their evidence.

The evidence of witnesses who are physically present or who give evidence from within the parliamentary precincts is protected by absolute privilege pursuant to the Constitution and statute. However, witnesses who give evidence from a location outside the parliamentary precincts are asked to note that they may not benefit from the same level of immunity from legal proceedings as that of a witness who gives evidence from within the parliamentary precinct. They may, therefore, consider it appropriate to take legal advice on the matter. Witnesses are also asked to note that only evidence connected to the subject matter of the proceedings should be given, and witnesses should respect directions given by the Chair. If statements are potentially defamatory in relation to an identifiable person or entity, witnesses will be directed to discontinue their remarks and it is imperative that they comply with any such direction.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise, or make charges against a person outside the Houses, or an official, either by name or in such a way as to make him or her identifiable. I remind members of the constitutional requirement that members must be physically present within the confines of Leinster House to participate in public meetings. I will not permit a member to attend who is not adhering to this constitutional requirement. Therefore, any members who attempt to attend from outside the precincts will be asked to leave the meeting.

I propose that we now proceed to the opening statements. I invite Mr. O’Mara Walsh to make his presentation.

Mr. Eoghan O'Mara Walsh

I thank the committee for the invitation to be with members today to talk about the current challenges facing tourism accommodation providers in Ireland. ITIC is the umbrella representative group for the tourism sector in Ireland. We represent 20,000 businesses.

As the committee will know, tourism is the State's largest indigenous industry and is the biggest regional employer, with 70% of the jobs being outside Dublin in regional Ireland. Covid walloped the sector with no international tourists allowed into the country for a two-year period. We are joined today by Mr. Paul Kelly, the chief executive officer at Fáilte Ireland. Fáilte Ireland estimates that, net of very generous Government supports, the tourism industry lost €6 billion as a result of the pandemic.

Thankfully, recovery has been strong over the past 12 months. ITIC estimates that 2022 saw a 73% bounce-back in the inbound tourism number by comparison with the number for 2019, prior to the pandemic. Having said that, there is a feeling of nervousness and apprehension about 2023, with soaring costs of business, a weakening economy here and overseas and, crucially, the impact of Government contracts with tourism accommodation suppliers.

I am here to talk about the current challenges facing tourism accommodation providers. While demand is strong, supply is compromised, and this – allied with business inflation – is posing the tourism industry significant challenges. It is crucial that Irish tourism maintain its value proposition. The experience that the domestic or international tourist gets must continue to be of very high quality.

The cost of running a tourism accommodation business continues to rise. Figures from EUROSTAT show that our minimum wage is 70% above the EU average, that electricity prices are 14% above the EU norm and that we have the second-highest cost of credit across the EU. These undoubtedly find their way into the price charged to the consumer. There is often talk in the media about high tourism accommodation prices. Undoubtedly, a small number of tourism operators charge excessive prices, but these are not reflective of the broad tourism industry. It is important to stress this. The vast majority of the 20,000 businesses I referred to charge fair and reasonable prices.

It is important to always revert to data in these discussions. Fact, rather than anecdote, should drive this debate. The latest available independent data for February show the average daily rate of a hotel room in Ireland was €143. This rises to €150 for Dublin. This is 26% above the amount for the same month in 2019. The increase is significant but we should remember it is over a four-year period and with inflation running at a very high level. I do not need to tell members about energy, labour and insurance cost increases, to name but a few over this period.

A key factor this summer that is likely to affect price concerns Government contracts for Ukrainian refugees and asylum seekers. The associated demand seriously compromises tourism accommodation supply. Currently in regional Ireland, 32% of all tourism beds have been given over to the Government for non-tourism purposes. This will have a serious impact on price because demand and supply will be completely out of sync. Imagine if the Government removed a third of all cranes from construction sites or a third of all tractors from farms. Such actions would have a profound impact on the supply and price of buildings and farm produce. How could tourism be any different?

If the Government's over-reliance on tourism accommodation stock continues, there will be few tourism beds in tourism towns up and down the country and thus little tourism activity. Consider County Donegal, for example, where over 50% of tourism beds are contracted to the Government. The proportion is 40% in County Clare and 37% in County Kerry. Undoubtedly, this will affect the price of the remaining tourism beds; however, worryingly, downstream tourism businesses, including restaurants, attractions, inbound operators and activity providers, will all miss out on the tourism dollar.

There has been a supply shortage across Irish tourism accommodation for some time. This has now been compounded by the humanitarian crisis. Tourism operators are prepared to play their part but cannot be asked to be the primary accommodation provider to the detriment of a broad industry. There needs to be a much more balanced approach to housing refugees, including through the use of vacant dwellings, unused buildings and State institutions, as well as hotels and guest houses.

ITIC welcomes the Government's recent decision to extend the 9% tourism VAT rate until the end of the summer, but this is only one factor in managing prices. Moderating inflation, increasing supply and, crucially, enabling competition are all critical. Ireland will never be the cheapest destination and we have a very high cost-base by comparison with European peers, but we always need to be mindful of value. Industry operators and Government policy must work tirelessly to protect our reputation in this regard.

I thank the members for their time. I will be happy to answer any questions they may have.

Deputy Ciarán Cannon took the Chair.

An Cathaoirleach Gníomhach (Deputy Ciarán Cannon)

I thank Mr. O'Mara Walsh. I now invite Ms Campbell to make the opening statement on behalf of the Irish Hotels Federation.

Ms Denyse Campbell

The Irish Hotels Federation welcomes this opportunity to address the committee to discuss the challenges facing our sector. Our industry, which experienced an exceptionally difficult period over the past several years, has come a long way since the lifting of Covid restrictions last year. We have made significant strides in restoring employment and stabilising tourism businesses the length and breadth of the country. In large part, this has been achieved thanks to vital supports provided by the Government, including, more recently, the extension of the 9% tourism VAT rate, significant reforms of the temporary business energy support scheme, TBESS, and, of course, tax-debt warehousing. These measures have provided tourism businesses with greater certainty and go a long way in helping to sustain the recovery in tourism at a time when businesses and consumers are facing significant economic and financial headwinds. The Government recognises the important role the tourism and hospitality sector plays as Ireland's largest indigenous employer, currently supporting over 250,000 livelihoods throughout the country, including 60,000 employed directly by Irish hotels and guesthouses. The decision to extend the 9% VAT rate means we remain in line with our European competitors, in particular those countries where tourism plays a key role economically. An increase in the rate to 13.5% would have seen us with the third-highest VAT rate on tourism accommodation in all of Europe.

Looking ahead, we are now seeing renewed – though it must be said, cautious – optimism throughout our sector. Early indications for this year suggest our industry will continue to build on the uplift in tourism activity seen during the second half of 2022. Needless to say, this is essential for the long-term prospects of our industry. Hotels are now seeking to invest in their businesses and product development, with particular emphasis on investing in our people, sustainability and growth, which is where we want to be.

While we are more optimistic, we are still very alert to the significant challenges and uncertainties that persist in the global economy given the difficulties around the cost of doing business, high levels of inflation, increasing interest rates, an ongoing cost-of-living crisis across key overseas source markets, and the backdrop of the continued war in Ukraine, including its impact on tourism capacity.

As borne out by recent wholesale price figures from the Central Statistics Office, cost inputs for hospitality businesses continue to rise, including for food and beverage supplies. While reforms to the TBESS will provide some welcome relief, we continue to face exceptionally high energy costs. Insurance costs are also an enormous challenge given the severe lack of insurers in the market currently underwriting cover for hospitality businesses.

On the consumer side, a major concern for us is the level of financial pressure being experienced as a result of persistently high inflation. This may prove stickier than previously thought. In recent days, for example, we have seen unexpected increases announced in inflation for both Ireland, rising to 8.5%, and the UK, rising to 10.4%, while inflation across the EU barely changed, at 8.5%. Consumers are also being hit by soaring interest rates, with more increases to come.

These factors have a knock-on effect on decisions people make when spending on discretionary items such as holidays and breaks away. Tourism and hospitality are particularly vulnerable and are invariably the first to take the hit. A case in point is the outlook for bookings from Great Britain, given the very challenging economic environment this market is facing. This is a pressing concern for hotels, guesthouses and the wider tourism industry. Great Britain, traditionally Ireland's largest source of overseas visitors, continues to face significant economic headwinds, and this is having an impact on the outlook and levels of forward bookings.

According to recent industry research carried out by the Irish Hotels Federation, 60% of hoteliers report that forward bookings from Great Britain are still down on the pre-Covid level. The rest of Europe is also challenging, while the prospects for North America are brighter this year.

In essence, as we look to the year ahead we are currently grappling with two questions as an industry: how robust is the upturn in tourism activity, and how may we best ensure the right conditions are in place to secure a long-term, sustainable recovery? We look forward to exploring this further with members today.

An Cathaoirleach Gníomhach (Deputy Ciarán Cannon)

I thank Ms Campbell. I now call on Mr. Kelly from Fáilte Ireland.

Mr. Paul Kelly

I thank the committee very much for the 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 I stressed the importance of finding as many better alternative solutions as possible as quickly as possible.

Thirty-two percent of all registered tourism bed stock outside Dublin is now contracted to the State and not available to tourists. This means that activity providers, visitor attractions and many other businesses in impacted areas will have their very survival put at significant risk. We estimate this will cost the non-accommodation tourism sector over €1 billion in lost revenue this year. This will be a real loss. As we know from inbound agents, many visitors who want to come to Ireland are now booking trips to other countries simply because they cannot find accommodation here.

In addition to the short-term business loss and the long-term consequences for the quality of some of our 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. However, the increased frequency and scale of price spikes in the accommodation sector is damaging its reputation nationally and internationally. To this end, I wrote to all registered accommodation providers in December 2022 and asked 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 more than 2,000 industry members, and, by invitation, at the IHF conference earlier this month. Another challenge facing the rural tourism economy is the lack of hire car availability during the summer. Some 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 again likely to be well below the level required to meet demand 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. This ranged from €50 to €250 per car, per week. This is acting as a significant commercial disincentive to restocking the seasonal fleet, and is leading to high peak season prices for those who cannot secure a car, and to a loss of potential visitors simply because some cannot secure a hire car. Finally, we are optimistic that this season will be strong in terms of demand. However, I reiterate that for the long-term wellbeing of our tourism economy, particularly the rural communities that rely on it, we need as much tourism accommodation stock as possible to return to tourism as quickly as possible. The pre-2019 VAT on VRT repayment scheme also needs to be reinstated.

Mr. Cian Ó Lionáin

I am joined by Ms Orlaith Gleeson, principal officer with responsibility for tourism development. I welcome the opportunity for further engagement with the committee on the current challenges facing providers of tourist accommodation in Ireland. The importance of the sector is well known, both for the economy and communities in every corner of Ireland. It is timely that we are looking at the challenges facing both providers and the wider tourism ecosystem. The challenging environment for tourism, as outlined at the Department’s last appearance before the committee in December 2022, has continued despite a strong inbound tourism recovery in 2022. The heightened levels of economic uncertainty, price inflation and supply and labour issues are going to make 2023 a competitive environment for both overseas and domestic tourism. The war in Ukraine, combined with the high number of international protection applicants, continues to put pressure on the Government's ability to offer humanitarian accommodation as part of the largest humanitarian effort in the State's history. Between those fleeing war in Ukraine and international protection applicants, Ireland is now accommodating more than 79,500 people in State-provided and pledged accommodation. The equivalent figure in February 2022 was 8,300. We have never seen so many people arrive in such a short timeframe, and the tourism sector, despite the other substantial challenges it is experiencing, has proven to be a critical part of the State response to the humanitarian accommodation emergency. The use of tourism accommodation to meet humanitarian needs, while necessary in the short term, has led to concerns for those involved in tourism, with impacts being felt beyond the provision of accommodation. Officials in the Department are in ongoing contact with the Department of Children, Equality, Disability, Integration and Youth as it works urgently across government with agencies, NGOs, and local authorities to bring new accommodation on board. We are also engaging with a range of other Departments, with input from colleagues in Fáilte Ireland, on how the potential impacts on the wider tourism ecosystem of long-term use of tourism accommodation might best be mitigated.

With regard to other challenges, recruitment and retention of staff continues to be an issue and Fáilte Ireland is continuing its excellent work in that area. I know Mr. Kelly and Mr. Wall from Fáilte Ireland have more information on initiatives like the excellent employer programme. The Department participates on the tourism and hospitality careers oversight group, which brings together industry representatives, State agencies, Departments and the education sector. The group has pivoted to focus on supporting the industry to address some of its immediate recruitment challenges this year. The Department and Fáilte Ireland are also working with industry and across Departments to ensure a co-ordinated approach to addressing the labour and skills shortages in the sector across all roles. The committee has also produced its own report on working conditions and skills shortages in Ireland’s tourism and hospitality sector. It makes recommendations pertaining to the responsibilities and functions of a number of Departments and agencies. The Minister, Deputy Catherine Martin, wrote to the committee in response to this report last month. While several recommendations therein are addressed, further insights from the committee regarding the recommendations would be helpful. I know the committee has recently written to the Department in that regard. The Department has also met with the Department of Enterprise, Trade and Employment to discuss the recommendations. We have also written to the Department of Further and Higher Education, Research, Innovation and Science to seek their views on specific recommendations. The Government's commitment to supporting the tourism and hospitality sector over past years during the Covid pandemic, and the current economic challenges is clear and consistent. The decision to extend the lower 9% VAT rate for the sector until 1 September is further evidence of this support. The Minister has made clear her view that the lower rate needed to be extended for another period to enable the sector to deal with the various headwinds facing the sector, and the certainty provided by the extension is most welcome. When we look at the wider economy and the particular set of challenges facing the tourism industry it is clear that a collective and concerted multi-stakeholder approach to tackling these challenges is essential. That is the approach the Department will continue to pursue.

Mr. Niall Gibbons

I do no intend to read the whole statement as some of the points have been well made. The year before Covid, 2019, was a record year for overseas tourism. We saw 11.3 million visitors come to the island of Ireland. They spent €5.9 billion and contributed to the employment of 325,000 people across the entire island. This year we have seen a strong rebound as we seek to rebuild tourism with a strong international marketing campaign. According to tourism economics, tourism numbers to the island of Ireland are forecast to return to 2019 levels by 2025. By 2032, tourism numbers will outperform 2019 by 36%.

We are seeing strong results in airports such as Dublin and Cork in the first months of this year. A strong restoration of direct air access capacity to the island of Ireland is scheduled for the upcoming summer season, with June forecast to be 102% of what it was in June 2019. We can see that overseas demand for holidays this summer is strong. There is certainly optimism for the long-term health of overseas tourism. However, there are also some challenges, which have also been articulated. They include a significant reduction in the stock of available tourism accommodation with many hotels now contracted to accommodate people fleeing Ukraine and people seeking international protection from other parts of the world. Reduced supply, coupled with strong demand is likely to drive rising costs and prices. A deterioration in the perceived overseas competitiveness of Ireland in the face of higher prices and supply constraints is a real risk for Irish tourism. The impact of this reduction in accommodation on rural Ireland is greater than in urban areas. Beds being withdrawn in rural areas also impacts our ability to ensure sustainability is at the core of activity, as we aim to spread the benefits to our regions on a year-round basis. Reduced tourism activities in certain areas have knock-on effects for other local tourism businesses such as visitor attractions, gift shops, outdoor activity providers, restaurants and pubs. There is, therefore, a negative impact on local economies. There has been an impact on group tourist business, particularly from Great Britain, France and Germany, which are three of our top four markets. These groups typically stay along tourist spots such as the Wild Atlantic Way but given the concentrated geographic distribution of refugees along the Wild Atlantic Way, that has become an issue. One major Irish incoming tour operator reports that it is not including County Clare on its programmes for 2023.

As Mr. Kelly articulated, car hire supply is also an issue. We will continue to monitor the situation closely. We aim to rebuild revenue from overseas holidaymakers to pre-pandemic levels by attracting value added tourists, and by focusing on markets that deliver the greatest revenue. This will be achieved through a wide range of promotional activities, including major marketing campaigns, publicity, programming, social media and digital marketing, as well as working with the tourism industry at home and the travel trade overseas. This is a significant year for us, as we mark the 25th anniversary of the Good Friday Agreement, of which Tourism Ireland is a product. I thank the Cathaoirleach for his earlier remarks. I am stepping down after 14 years as CEO and I thank the committee members for their support over the years.

An Cathaoirleach

I thank all the witnesses for their opening statements. We will proceed to the question and answer session. Each member will have an eight-minute slot to both put questions and receive answers.

Deputy Imelda Munster

I welcome the witnesses and thank them for attending. I will start with Mr. Ó Lionáin or Ms Gleeson.

Representatives of the Department of Children, Equality, Disability, Integration and Youth appeared before the Committee of Public Accounts three or four weeks ago in the context of the Ukrainian crisis and accommodation. They stated that the contracts of 141 hotels were due to expire at the end of March and that, of those 141, just 51 had agreed to extend the contract. Does the Department have an update on those figures? I am sure it has been engaging with the other Department. Have the numbers increased? The representatives stated also that, at a conservative estimate, it would equate to 3,000 beds, although there were reports it could amount to upwards of 17,000. These figures relate to hotels alone, but in respect of tourism accommodation in general, how many operators have decided they will not renew their contracts? What will that mean for the release of tourism beds? Is there a timeframe for all this?

Mr. Cian Ó Lionáin

The Deputy is correct; we are in weekly engagement and contact with the Department of Children, Equality, Disability, Integration and Youth. While I do not have the detailed figures to hand, my understanding as of today, from talking to its officials, is that a large majority of the hotel contracts continue to be renewed. That Department is working on a rolling, week-by-week basis as contracts expire and my understanding is that only a small minority of hotels are choosing not to renew. I do not have the precise figures but my understanding is that a much higher proportion are remaining in the sector than might have been anticipated a month or two ago. I can certainly ask that Department for detailed figures and we will convey them to the Deputy.

Deputy Imelda Munster

Yes, it would be good to find out the renewal rates and get some figures for how many beds will not be released to tourism from the end of March and throughout the high season. That would help us gauge what effect it is going to have.

Mr. Cian Ó Lionáin

Absolutely. We will track down the up-to-date figures. As I said, my understanding is that a large majority of those operators in the provision sector are remaining in it.

Deputy Imelda Munster

That does not bode well for tourism for the summer season. I acknowledge there is a crisis but no other plans seem to be coming from the Government, or at least I have not heard of any, to move refugees out of the hotel system and into alternative accommodation.

In his opening statement, Mr. Kelly stated Fáilte Ireland had flagged the increase in the frequency and scale of price spikes in accommodation and the damage that was doing to reputation, both domestically and internationally. He indicated he had written to all accommodation providers in December and attended an IHF conference last month. I accept the agency is trying to take account of the bigger picture of the risk of international damage, but does Mr. Kelly feel as though it has made any headway in getting through to either representatives of the IHF or hotel owners in general regarding the long-term damage that could be done?

Mr. Paul Kelly

Following some of the media coverage last year, there is a growing awareness and understanding of that issue, although time will tell. The behaviour of Irish accommodation providers is broadly consistent with that of accommodation providers throughout the world, and many of these companies are internationally controlled and run and have shareholders and stockholders to answer to. The difference in the case of Dublin, in particular, is that it has one of the highest incidences of what we call compression nights, that is, nights where there is more than 90% occupancy in the city. It is on those occasions that we see price spikes and this relates to what I said in my opening statement. There was an underlying issue, which we flagged in 2018 and 2019, whereby, although there was a strong development pipeline, there was nonetheless not enough in it. As a result, we have come into this position with a city that is under-resourced with hotels in terms of what is required to support both tourism and the economic activity in the city. The key is that we do all we can to encourage the sufficient development of hotels in the city.

Deputy Imelda Munster

I accept that Fáilte Ireland is doing all it can. One reason I asked the question relates to the fact the IHF’s statement made no mention of anything its members are doing to combat that. It stated that“60% of hoteliers report that forward bookings from Great Britain are still down on pre-Covid levels” and that circumstances are also challenging for the rest of Europe. Is reputational damage starting to kick in as a result of the overcharging that we have seen? I was aghast that Ms Campbell did not make reference to what the federation has done within its organisation. Mr. Kelly referred to compression nights but I disagree fundamentally. If a hotel is booked to 90% occupancy and it rips off people for the remaining 10%, that will be part and parcel of what is doing the damage. As I said, the public have little sympathy for hotels at this stage. I was just amazed the IHF representatives did not make reference to what it is doing about this.

Mr. O'Mara Walsh pointed out that the latest data show the average daily rate for an hotel room in Ireland is €143, or €150 in Dublin. Where did he get those figures? When I carried out an online check, leaving aside anecdotes, few hotels have rooms for under €143 or €150 in Dublin or elsewhere in the country, respectively. There might be hostels and lodgings for under that but there are very few. I return to the fact that, while the impact on the tourism industry is compounded by the crisis in Ukraine and by hotels renewing their contracts, which is entirely their decision, there is a double-whammy arising from the reputation being damaged and the lack of value for money for both domestic and international tourism. I have spoken to people who are going to come from England for a wedding party. None of them will book an hotel because they checked and were astounded at the prices. They said there was no way they would pay that money. I say this because Ms Campbell stated that for 60% of hoteliers, the number of forward bookings had reduced. Has reputational damage been done, and if so, is there any way we can reverse it for the sake of tourism in Ireland as opposed to for the benefit of greedy hotel owners?

Deputy Alan Dillon resumed the Chair.

Mr. Eoghan O'Mara Walsh

I fully agree value is critical. In the 2000s, we became expensive as a country. The financial crash then kicked off but it took us approximately seven years to regain the lost market share, so value is critical at the moment. The figures I quoted for the latest month we have, February, are a compilation of 64,000 hotel bedrooms, independently audited by STR, that give the average rate. They relate to February, so that figure does not, obviously, refer to future months. The increase in the price of the average room is 26% above that of the same month pre-pandemic, which, to my mind, is driven largely by increased costs and so on. The small minority of operators that charge ridiculous prices are not representative of the true tourism industry and do not cast the wider tourism industry in a good light.

They have damaged the industry. We have been calling for some time for traders and providers of all types, whether they are big multinationals, SMEs, guest houses, tourist attractions, hotels, culture companies or whatever, to be mindful of value. Even if the cost base has risen and, obviously, many of those costs have to be passed on to the consumer, ultimately, the product or service provided to the end user must continue to offer value. If we lose our value proposition, we will be in trouble. We are very conscious of that. It is an issue we have spoken about clearly for several months.

Senator Malcolm Byrne

I thank Mr. Gibbons for his service and the work he and his team have done around Tourism Ireland. I wish him the best in his new role. I also acknowledge the work of all of the witnesses. Even though this is a challenging time for the tourism sector, I wish to thank the providers for all they have done in tourism provision and in responding to the humanitarian crisis. Some operators have gone above and beyond it simply being a contract. It is important that we put that on record, notwithstanding some of the challenges.

I have several questions. I will address the first to Mr. Ó Lionáin regarding the provision of short-term letting. We heard that one of the big challenges is in rural tourism, in particular with regard to high levels. I am conscious of the chart from ITIC, which showed, county by county, the high proportion of hotel accommodation occupied by displaced persons. This committee expressed concerns about how the short-term legislation was being proposed. Part of the delay now is with the technical regulation information system, TRIS, process. There is a nine-month breathing space. I would be grateful if Mr. Ó Lionáin would update the committee on the approach the Department is now going to take. I understand there are discussions within the Department of Housing, Local Government and Heritage and that many of the concerns raised in this committee regarding rural and coastal tourism, in particular, will be addressed.

Mr. Cian Ó Lionáin

As the Senator said, the important context in this case is that there is now an opportunity due to the European Commission extending the standstill, which will run until 22 December this year. That gives us a further chance for engagement with the committee, stakeholders, and the Department of Housing, Local Government and Heritage. A key point is the engagement we had with this committee as part of pre-legislative scrutiny. The Department was conscious of the need to balance long-term private rentals with short-term letting, particularly in areas that are most dependent on tourism. While we understand that instinctively, our colleagues in the Department of Housing, Local Government and Heritage have now absorbed that point. They are currently working on planning guidance for local authorities which, I hope, will give clear direction and guidance to local authorities on how to manage the issue of planning enforcement in areas that are not under a particular housing need but where tourism is a huge part of the local economy. From talking to colleagues in the Department of Housing, Local Government and Heritage, they are continuing to work on that guidance. The fact that the TRIS process has been pushed back means they can continue to work on it. My Department and the Department dealing with the planning guidelines recently met with stakeholders - I think it was in mid-February. We are open to repeating that discussion, particularly now that we have more time. The key message I would share is that there is a strong awareness of the need to balance housing need and the needs of local tourism economies around the country, while recognising that there is a housing emergency, which is why we are doing this, in the first instance. The point was well made that we must continue to work on that.

Senator Malcolm Byrne

I would appreciate that. If the concerns of this committee are taken on board and the balance is struck, that would be correct. Mr. Kelly used an interesting phrase when he said we are "under" hotels in Ireland. This is part of the broader challenge we face regarding housing and accommodation. In an optimal situation, how many more hotels or hotel bed nights do we need nationally and perhaps in Dublin? It is a very specific market. Is Mr. Kelly able to provide a rough estimate? Does he have any concerns? We are dealing separately with issues around the planning and development legislation as well. Are there any issues Mr. Kelly thinks need to be addressed?

Mr. Paul Kelly

Specifically, my comment about "under" hotels was about Dublin. The good news is there are about 3,500 more hotel bedrooms, which are pretty firm as they are already in the advanced stages of the development process, on-site, etc. That will be an approximate increase of 15% in the stock in Dublin. The last time we did this analysis, we said that, in addition to what was in the pipeline, we needed approximately another 1,100 hotel bedrooms in Dublin to meet our projections of future demand. We have not been able to repeat that modelling yet because we are coming out of Covid-19. It is probably not far off a requirement of approximately another 1,000 to 1,500, on top of the 3,500 already in train in the Dublin area. In order to develop tourism and other regions, there is a requirement for accommodation but not necessarily hotels because alternative forms of accommodation can sometimes be a better economic solution in some of the more rural areas.

Senator Malcolm Byrne

It is about getting the short-term letting provision correct as well.

Mr. Paul Kelly

Yes. As Mr. Ó Lionáin said, it is important to balance tourism and the need for long-term letting. That is not a factor of the Fáilte Ireland register; the new legislation will be the approach to planning. All the Fáilte Ireland register in the new legislation will do is provide visibility around who is involved in short-term letting and who is not. It is about the planning guidelines and what is given planning permission or not, etc. That is where the register will come in. Whether it is glamping, caravans, camping or guest houses, etc., a range of alternative provision will be required, particularly in the future and looking to more sustainable types of accommodation developments. That is on the list. Our key focus from an accommodation shortage perspective at a national level is that we need more in Dublin.

Senator Malcolm Byrne

Over 5,000 rooms are needed, ultimately. Perhaps Ms Campbell can answer my next question, as she mentioned the energy support scheme. I know from talking to hotel owners that energy costs are the big issue. The scheme has been amended, but are there any specific changes to the scheme that Ms Campbell thinks would be beneficial to the sector?

This committee is also responsible for the arts, media and culture. I have a question around the impact of cultural tourism in light of the films "The Banshees of Inisherin" and "An Cailín Ciúin", which were, significantly, filmed outside the major urban centres. Will Ms Campbell comment on the impact of cultural tourism and filming in the regions, in particular? This committee takes a strong view on the regional uplift to support filming in the regions. Does Ms Campbell have a view on cultural tourism?

Ms Denyse Campbell

The change in criteria is welcome. Currently, the scheme also takes into account businesses that use kerosene and liquefied petroleum gas, LPG, which is great because up to that point, it was just businesses on mainline gas. That was very welcome, as was the increase in the threshold. It is a huge concern. I have spoken to hoteliers who told me the price of energy is very difficult to absorb. I spoke to a hotelier in County Kilkenny yesterday whose gas bill in December 2019 was €9,000 and last December it was €51,000. That is not even a hotel with a leisure centre, and it is the same for electricity.

Senator Malcolm Byrne

I can give Ms Campbell examples of hotels with a multiple of that also.

Ms Denyse Campbell

Yes, in one hotel the cost per kilowatt hour of electricity has gone from 12 cent to 42 cent, which means its energy costs have gone up by 172%. That is just for electricity. This is a major concern for businesses but the TBESS will help in some small measure.

Senator Malcolm Byrne

The Government has been responding but I am curious about whether other changes should be made to the scheme.

Ms Denyse Campbell

Mr. Fenn may wish to respond.

Mr. Tim Fenn

The key issue, on which we are waiting to get clarification, is how kerosene and LPG will be included. That is very important for businesses operating outside the main urban areas that are not on the gas grid. We have to see how that pans out. The devil will be in the detail, as it were. There is a certain softening in wholesale prices but that has not found its way into retail prices yet. Many of those who were in contract are coming out of contract now, so it is going to be a very stressful time. Energy is a major part of our industry. The answer, therefore, is that there are other possible changes.

Senator Malcolm Byrne

I am not sure who would like to respond to my question on culture.

Mr. Caeman Wall

I will give a quick response, if I may, on cultural tourism and perhaps Mr. Gibbons will speak on our tourism policy planning. We have a strong awareness of cultural tourism. Historically, we have reached out to members of Ireland’s diaspora around the globe over the years and while we continue to focus on them, we are also looking at what we call the "affinity diaspora". These are people who do not necessarily have an immediate connection with Ireland but feel connected through music, dance, movies and all the rest of it. This is something we are very alive to and I suspect Tourism Ireland may be able to tell the Senator how important that is around the globe.

Mr. Niall Gibbons

This is at the centre of what we do. The three points people always make in research abroad on what are what it is about Ireland are the friendliness and warmth of the people, Irish culture and our landscape. The Senator mentioned “The Banshees of Inisherin” as just one example. The screen tourism area has very much exploded in the past ten years. We have a dedicated resource in-house for dealing with that and we are working very closely with Screen Ireland and Northern Ireland Screen. We saw the success of the series “Game of Thrones” and what that did for Northern Ireland. We had the success of “Star Wars”, “The Banshees of Inisherin” and “An Cailín Ciúin” and there is a pipeline of other projects coming down the track, for example, “Vikings: Valhalla". What that series has done has been very strong. Searchlight Pictures has made a two-minute short movie for us which has been viewed 20 million times. We did a great deal of promotion around the Oscars. Whether a film wins an Oscar or not does not matter; it is about being there and having a presence in the marketplace.

To give a few other cultural examples, we now have partnership agreements in place with the Irish Arts Center in New York, Centre Culturel Irlandais in Paris and the London Irish Centre. This is bringing the diaspora, the cultural bit, and trying to redefine the stereotype of the Irish abroad. There is a great exhibition on in New York at the moment called "Paddy Irishman" by Ross O’Callaghan. Part of the response to that is the breaking down of the stereotypes that people often have when they think about the Irish abroad.

Senator Malcolm Byrne

The importance of that should not be underestimated. We should also first incentivise filming in the regions. The regional uplift policy was critical and I am aware that it was discussed at this committee. It is a question of the agencies liaising with Screen Ireland on the importance of the regional uplift.

Senator Shane Cassells

I extend a warm welcome to all of the witnesses who make regular appearances at this committee. It is good to have that frequency of engagement between the practitioners and the legislative body. I thank them for that. I also thank the Department.

Mr. O’Mara Walsh spoke about the value proposition. He spoke of extracting the cranes from Dublin or the tractors from the field and the impact that that would have on any sector and, by extension, the effect the extraction of rooms from supply would have on the tourism sector and the impact it would have on the price of rooms. That sounded very ominous. Earlier this year, Mr. O’Mara Walsh and all the representatives here argued very strongly at this committee for the retention of the 9% VAT rate. The sector was asking for fair play from the Government. All the Government parties supported the industry in that regard and argued hard for retaining that rate. A little over a month later, I get the sense that the sector is setting out a scenario whereby there will be high prices in the summer, a sort of scorched earth, and we will get this in any event. That worries me greatly. Perhaps Mr. O’Mara Walsh will tell me my fears are misplaced in that respect.

Mr. Eoghan O'Mara Walsh

Ms Fitzgerald Kane may respond to the Senator on this question also. I have no idea what the pricing will be over the summer because I have no hand, act or part in what a company charges a customer. However, looking at some of the fundamentals, if the cost base of a business is increasing significantly - we have just spoken about the doubling and tripling of energy rates and we must remember that a hotel or tourism business is a significant energy consumer - that has to be recouped in some shape or form by the business owner. In addition if 32% or one third of all tourism beds are removed from the stock, it creates a significant demand and supply break in equilibrium. A concern is that this will lead to an increase in prices.

There is difference between price and value. We could well have an increase in prices but as long as we keep offering a strong value proposition, I believe we will be okay. As I believe I said to the Senator previously, the vast majority of the 20,000 businesses in the sector are SMEs and most are in regional Ireland with many of them labour intensive. I believe the vast majority of them, even with the cost increases and the shortage of tourism beds, will charge fair and reasonable prices. Some outliers may behave irresponsibly and they should be called out. They do not reflect well on the industry and they are not a true reflection of it.

In the main, tourism and hospitality, despite a high cost base and an accommodation shortage brought on by the humanitarian crisis, will still charge fair and reasonable prices. I am, however, mindful of the issue and it is only responsible on our part to set out the context and narrative. As I said, I cannot influence prices. All I can do is to look at the factors determining price. Demand is going one way, supply is going the other way and in the middle of all of that, we have all these cost increases. That is what worries me.

Senator Shane Cassells

Mr. O’Mara Walsh spoke about a possible increase in prices and said with retention of strong value, this would not have an impact on the sector. That is not what he told the committee only a couple of short weeks ago when he said an increase in VAT prices would have a detrimental impact on the sector. We cannot have it both ways. That is a point I consistently make at this committee.

I know Mr. O’Mara Walsh cannot say what his members will do individually but, equally, he cannot argue that it is okay if prices go up because we have a strong value product, having stated a few weeks ago that he did not want the Government to increase VAT because it would lead to an increase in the price of hotel rooms. He spoke about the supply issue being one of the contributing factors. Mr. Kelly clarified that in Dublin we are moving from having 22,500 bedrooms to having 26,000 bedrooms. That is a great deal more tractors and crane going back into the field this year to ensure there is a levelling out of the beds on offer. Mr. O’Mara Walsh might accept that.

Mr. Eoghan O'Mara Walsh

I do not believe Mr Kelly was saying that those additional few thousand bedrooms were going to come on stream straightaway. That will take time. The crisis brought about by the Ukraine conflict is going to be with us over the next 12 to 18 months. It is not a crisis of two or three months but one of two or three years. Unfortunately, the supply of additional bedrooms, which ultimately will moderate price, takes time.

My point on the VAT rate is valid. VAT is a value added tax. It is a sales tax added to the ultimate price of a bedroom or a meal. The vast majority of the 20,000 businesses in the sector are SMEs with modest profit margins. They have absorbed substantial cost increases and I do not believe they would have been able to absorb a VAT hike. An increase in the VAT rate would ultimately have ended up being inflationary. We strongly welcome the Government’s support for the sector in keeping VAT at 9%, at least until the end of the summer. Perhaps Ms Fitzgerald Kane wishes to contribute on that.

Senator Shane Cassells

Just on that point, I am well aware of the point Mr. O’Mara Walsh is making that the businesses would not been able to absorb the VAT increase and that it would have been passed on to the customer. However, he also made the point that prices will go up regardless of the fact that we kept VAT at the 9% rate and he does not believe that will have a detrimental impact on the sector. That is my point. He came in here six or seven weeks ago and argued the case that an inflationary measure by the Government would have an impact and now argues that individual choices within the sector to put up prices are okay. Those choice are not okay.

We made this point to the witnesses prior to Christmas when we talked about the fact that so many international customers are going to have their beds booked for Ireland this summer but the poor old sod that is going to get the impact of price increases is the Irish domestic tourist this summer. That is my point. That is my problem. When we come back here in the autumn and have another debate, it is going to make it extremely difficult for members of the sector to make that argument again on retention when it has been contradictory, in my mind, here today.

Ms Elaina Fitzgerald Kane

I wish to share some information in regard to our own business, which is a four-star family-run hotel. It is one of three hotels in our area, where tourism is very important. To give members an idea, I got some annualised comparisons of what we spent on food, beverages and insurance on the difference between 2019 and 2022. Our food purchases were up by 64%, our beverage purchases were up by 52% and insurance was up by 31%. I could give a number of other figures. All those figures are much higher than what pricing has increased by, according to the SDR, which is internationally recognised data, at 26%. There is no excuse for pricing outside of what the value proposition is. We have heard plenty of stories about that. The reality is, if we take the hotel piece alone, there are 64,000 hotel rooms throughout the country, of which 23,400 are in Dublin and of which a small minority have been coming to the fore in terms of attention because of the rates they are offering. The average room rate is €143, however, and nobody talks about the rooms that are sold below that price. You could stay in Dublin tonight for €123. For some people, that is outside of their budget range and I fully acknowledge that. We have to look at the statistics in terms of the numbers. We have written to our members to stress the point around value and we continue to do that.

We urge people to vote with their feet. If something does not represent value to them, they should not book it. Senator Cassells raised an important point about the domestic tourism visitor. As somebody who greatly enjoys holidaying around Ireland with my family, one thing that Covid-19 taught me was to place more value on our time. I book much further in advance now. Not everybody can do that. When we are booking, we need to adopt the same mindset as if we were booking overseas. We need to change our patterns in regard to booking early. That is not to say that value will be delivered every time. It does not mean we will not hear about prices that are off the scale and ridiculous, because that sometimes happens. Equally, there are people who genuinely strive to deliver the best possible tourism experience at a proposition that has a value when it comes to price. We cannot all be branded with the same iron. That is happening, I believe, repeatedly. We try to call out ridiculous pricing where we see it but we cannot forget the fact that the hotel piece alone is 64,000 rooms, not to mention all the other beds throughout the country. We need to be careful that we do not sweep everybody in and tar them with the same brush. The reality is, in our business, the increase in the inputs is significantly more and sometimes double the actual increase in pricing over the years. We need to be mindful of that.

In regard to the data on the average increase of 26%, I have not seen that in my own business. If we look at that as a regional issue, it might tell a different story.

Senator Shane Cassells

In his opening statement, Mr. Kelly spoke about expressing views here in April and December of last year. He absolutely did express them. I remember that it was on the day that President Zelenskyy addressed the joint sitting of the Houses. Mr. Kelly was certainly sticking his neck out on that particular day. He spoke about the reputation of Ireland being at risk. Does he believe we are in for a repeat this summer or has there a levelling out in regard to the issues we faced? In regard to the capacity issue outside of Dublin, in the regions, is that of concern to Mr. Kelly for this summer as well?

Mr. Paul Kelly

The short answer is yes, I am concerned about a number of challenges we face in the coming season. I am most concerned about the rural tourism economies and what might happen to those other businesses that have been supported and nurtured predominantly by the business owners themselves, but also by the State through such organisations as ours, in developing those underdeveloped tourism towns and regions that are seasonal by nature. We are trying to extend those seasons, but because they are seasonal by nature, they are the type of places where the State contracts are particularly appealing because they give year-round occupancy to accommodation providers.

Senator Shane Cassells

In regard to the businesses that are supported by the tourism industry, and I heard Mr. O'Mara Walsh speak about this on "Morning Ireland" today, have we hard data from the 2022 period that show there has been a threat to their long-term survival?

Mr. Paul Kelly

Yes, we have data around where the visitors spend their money. If the visitor is not there, that money obviously will not be spent, be it in visitor attractions, restaurants, with activity providers, bars and retail, on transport providers and so on. There are a range of areas where we see that. If those businesses go out of business, how attractive will those towns be and how long will it take to build them back up to be attractive tourism destinations? We learned during Covid-19 that it is not possible to turn tourism off like a tap and turn it back on again afterwards. That will be the case and that worries me most about some of those places that showed real promise as developing tourism economies and tourism communities. There are certain towns where almost 100% of the accommodation is gone to Government contracts and because the visitors will not be there, those towns will struggle to get back to being vibrant tourism destinations in the future.

Senator Shane Cassells

That is an ominous warning.

Mr. Caeman Wall

What we are seeing now is that some businesses are talking about reopening, but opening later and closing earlier. That is the first sign of hard data saying, “I am doing a double think; can I run a viable business over the season?” If it is hard to find a place to stay, that is a problem. If visitors find it hard to find a place to stay and then worry about what to see and do when they get there, that is a very big problem.

Deputy Ciarán Cannon

I thank the witnesses for their helpful contributions. I echo the words of the Cathaoirleach in wishing Mr. Gibbons the very best in his future endeavours. I thank him for his extraordinary service as an exemplar in the use of social media in promoting our country at every opportunity. His work was astounding and I thank him.

Many members have raised the issue today of the fears around an increasing shortage of tourist accommodation in Ireland as a whole. Mr. Gibbons elaborated further to say we need, and we all wholeheartedly agree, to spread the benefits of our tourism economy to all regions. He pointed out there is a significant shortfall arising in rural accommodation. Yesterday Galway County Council published the emerging preferred route for the new greenway from Athlone to Galway, which will be an extraordinarily impactful and transformative piece of infrastructure for the west, especially for the Hidden Heartlands, which have yet to have any significant investment in their tourism offering. That will allow us to complete a greenway the whole way from the east coast to the west coast, something which no other country in the world can offer at this time.

We have had witnesses before the committee recently from the Irish Self Catering Federation, ISCF, pointing out that the impending legislation around short-term letting has the capacity to undermine completely or certainly significantly endanger the offering it makes to tourists, particularly in the aforementioned rural locations that would not be well served by hotels and other accommodation. I wish to ask Mr. Kelly, Mr. Gibbons and indeed Mr. Ó Lionáin how they suggest we could rectify or accommodate the concerns of the ISCF and indeed anybody involved in offering self-catering accommodation throughout rural Ireland.

We are arriving at a point, especially with greenways, where we hope we are going to have a significant influx of new tourists into areas that have never experienced tourism before. Consequently, we need to be exceptionally careful about considering legislation that may drive people out of providing short-term accommodation in rural Ireland.

The legislation in question seeks to do two things. The first is to provide for all tourism providers, be they a sprawling hotel in Dublin city centre or a cottage on the west coast of Clare, to be registered with Fáilte Ireland. All the providers think it is a wonderful idea and I wholeheartedly agree. Then we are suggesting we look at all these short-term lets and determine how many of them can be used for long-term letting to families in urgent need of homes. We are proposing to do those two things at the same time, whereas I suggest we do the registration piece first. Let us get an accurate assessment, rather than something on the back of an envelope, of how many accommodation offerings we have and what form each takes, that is to say, whether it is a hotel, somebody's spare bedroom in Lahinch, a shepherd's hut in the back garden of a house in Belmullet and so on across the board. Only then can we make a reasoned assessment of how many of those short-term lets could realistically find their way into the long-term letting market. We need to do that first. We need to spend perhaps the next year in providing for that to happen. Then, and only then, should we seek to impose some sort of legislative pressure on all providers of self-catering accommodation to regularise themselves, seek planning permission, or whatever may be necessary to continue doing what they do very successfully. If we are really ambitious about spreading the benefits of tourism into every single townland, we must be exceptionally careful in how we move forward on this. I would be interested in comments from Mr. Kelly, Mr. Gibbons and Mr. Ó Lionáin on that.

I have a final point on cycling tourism, which is a subject close to my heart. The global market for cycling tourism is estimated at $120 billion per annum. That is predicted to grow by about 9% every year up to 2030. There is a significant growth opportunity emerging around e-bikes in particular because they provide an opportunity for people who would not normally engage in cycling tourism to do so and enjoy all its benefits. Germany is a huge tourism market for Ireland. In 2021, 42% of cycling tourists in Germany used electric bikes and the figure is similar in the Netherlands. E-bike charging stations have been provided by the local authorities along some of the EuroVelo routes in the Loire Valley and the banks of the Rhine. Those routes are already successful in attracting cyclists, but there is now also acknowledgment of the opportunity presented by e-bike tourism. Ireland could and should become one of the world's best cycling tourism destinations and could easily plug into - excuse the pun - the emerging market around e-bikes, which has so far gone untapped here. I am working with one or two visionary accommodation providers who are seeking to develop Ireland's first-ever e-bike tourism loop around beautiful Lough Derg and the Hidden Heartlands. There is a really exciting opportunity presenting here and I would love to get the views of those involved in promoting Ireland internationally as a tourism destination on how they see our cycling tourism offering growing and developing in the future.

Mr. Paul Kelly

There are a number of points there and I will try to race through them. We welcome all the greenway development that is going on and we are working closely with our colleagues in the Department of Transport and the various local authorities to ensure they are as good a visitor experience as they possibly can be. We are in a period of transformation of the cycling infrastructure in Ireland. We are coming from a point where we were well behind international competition and we are now rapidly catching up and hope to pass them out, if members will pardon another pun. There is significant development going on at industry level with cycling providers. The Deputy is right that e-bikes transform the cycling offering because people of completely different abilities can now cycle together, and that is a transformative change in the industry. We are working with many providers to help on this. Many of them are part of our digital that delivers programme. This gives them significant investment to help them get online, become bookable, get visibly international and get their own businesses up and running out there. The Deputy mentioned the Hidden Heartlands. In addition to the likes of that greenway, the just transition funding of €68 million Fáilte Ireland has secured will transform the overall offering, so it is an exciting time for the Hidden Heartlands with respect to the development of tourism in the region over the coming years.

On the self-catering point, there is nothing in the legislation or the proposals we are working on that will, in and of itself, limit the provision of self-catering accommodation. The legislation is seeking to deliver the registration and the visibility of that. As to how many providers will continue to provide short-term accommodation versus becoming long-term residential housing, that would be a planning matter for local authorities. It already is. The issue is the current system does not give local authorities the visibility in terms of what people are using their properties for. We need the legislation to give that visibility. Fáilte Ireland has done a lot of work over the past ten years to try to encourage people to register and to try to make it as easy and cheap as possible to voluntarily come onto the Fáilte Ireland register, yet we still have tens of thousands of properties that are not registered. We need the legislation in place to put an onus on both the property owners and, critically, the platforms to get the level of visibility the Deputy is talking about. If we do not have that, we will be back here in another year, or five or ten, and we still will not know how many such properties are in the State. We will be screen-scraping and trying to make estimates etc. as opposed to actually having a register. We need the legislation in place to get the visibility in order for the area to be managed. The specific two-step approach the Deputy spoke about is exactly what is built in. We have always proposed a six-month clarification period that would give both property owners and local authorities time after initial registration to clarify the planning status and what is required etc. As Mr. Ó Lionáin said, his Department and we in Fáilte Ireland have liaised with the Department of Housing, Local Government and Heritage to discuss the importance of trying to recognise in any planning guidelines the areas that require tourism accommodation and to ensure properties that are not in any way suitable for long-term residential purposes are not forced out of the tourism market.

The UN principles on the development of sustainable tourism state tourism must be developed in a way that is cognisant of the needs of the wider community. We need to understand we are developing tourism in the context of a residential housing crisis. Also, if a property that was built and had planning permission to be a long-term residential unit is being used as a short-term tourism let, then that is not fair on the neighbours. This especially applies with apartment blocks and so on. It is important tourism be developed so it is consistent with the needs of the community in order for it to be sustainable.

Mr. Niall Gibbons

I will make a short point. We work closely with the Irish Self Catering Federation. It is important for mainland European markets in particular. I will give an example. This year we are going to see a quadrupling of sea capacity for tourism from France and Spain coming into the south east via Rosslare

It is amazing. It is coming from Brexit in that people are looking for direct sea routes for white goods and so on. All three ferry companies have stepped in. From Bilbao, Cherbourg, Dunkirk and Calais, there has been a quadrupling of what was there in 2019, which was the previous peak year. Many of those people will be looking for self-catering accommodation, which is very important to the real economy.

On cycling, it is a no-brainer. The more things we can upscale internationally, the better. We saw great success with the Giro d’Italia in 2014 because that is a fantastic showcase for us from a landscape perspective and regarding the country's reputation for friendliness, which is all great. I know the Minister, Deputy Catherine Martin, and the former Minister in Northern Ireland put in an expression of interest in regard to the Tour de France, which would be wonderful in years to come. If we can build these greenways, in particular the ones of scale that were announced yesterday, it will be very good for tourism.

Mr. Cian Ó Lionáin

I will start with the Deputy’s second question. On cycling and the infrastructure relating to it, I want to pick up on a point that Mr. Gibbons made. We are trying to grow the cycling ecosystem, so we are absolutely exploring a joint bid for the Tour de France, North and South. Another area under the national development plan is that we want to build a velodrome on the campus because, from all of our research, that will become a real generator for awareness of and participation in cycling.

The point on e-bikes is well made. I am conscious that the Department of the Environment, Climate and Communications has a pilot scheme with sports clubs at the moment but it is for motorised EVs, whereas I think there is an obvious evolution there to create those bike linkages.

On short-term letting, my colleagues have made the points very well. From the Department’s perspective, we want to grow self-catering. The challenge is that there is a housing crisis. There are places where the resulting tension needs to be addressed, but, in the long term, one of the bigger challenges is how we actually grow and build self-catering because it is a unique offering that is of particular value to some of our key markets.

Deputy Ciarán Cannon

I thank the witnesses for their contributions. We absolutely need to grow but we need to be exceptionally careful in ensuring that whatever piece of legislation we pass assists in that endeavour, rather than suppresses growth. That is all I am saying.

Deputy Peter Fitzpatrick

I welcome the witnesses. I agree that tourism plays a big part in this country, especially with the small SMEs. I agree also that the sector is facing serious challenges. I read through all of the presentations and put together a bit of a presentation of my own. I will read it out and then ask for comments from the witnesses.

Given business costs, ongoing energy crisis and inflation, which have been well highlighted, the tourism industry has been hit very hard, as we all agree. The tourism sector has always relied heavily on overseas visitors, especially in my constituency of Louth and Meath as we are in the Border area. However, we are having a big problem with overseas competitiveness in light of higher prices and these constraints are a risk to Irish tourism.

I agree that the sector needs investment. There are incredible challenges across businesses and the SME sector. The Ukraine credit guarantee provided €1.2 billion in low-cost lending to business. These have dovetailed with other measures announced in the budget, such as TBESS, to support businesses through the energy crisis. The funding for the tourism sector will ensure that Fáilte Ireland can continue its important work of implementing a recovery programme and having campaigns to help deliver the economic growth of the industry and individual tourism businesses.

That said, there is a significant challenge facing the tourism sector. The viability of some tourism businesses is a real concern. New figures from ITIC show that visitor numbers are down 20%, which is a high figure. Reduced tourism activity in certain areas will affect business, including group tour businesses, visitor attractions, gift shops, outdoor activities, restaurants and pubs, and, therefore, will have a negative impact on the local economy. I live in Dundalk. I have spoken to many tourism businesses there and in the surrounding area. They are flabbergasted by the reduction in tourism and they are very concerned about the costs they are experiencing. While budget 2023 rightly dealt with the cost of living, it should also form part of a wider roadmap towards ensuring that Ireland is an attractive place in which to do business. I commend the Government on extending the 9% VAT rate.

On supply versus demand, Tourism Ireland notes the lack of available tourist accommodation and states that as this is coupled with strong demand, it is likely to drive rising costs. The war in Ukraine, combined with the high number of international protection applicants, continues to put real pressure on the Government’s ability to offer humanitarian accommodation. On top of this, accommodation demand is sky-high, especially considering the decision last week to lift the eviction ban, which I am sure is going to cause a lot of problems after 1 April.

The State is utilising the tourism sector, such as hotels and bed and breakfasts, to address the accommodation shortfall. These options are necessary to provide shelter to international protection arrivals, to meet basic needs and to prevent homelessness. The most up-to-date figures for the number of beds contracted by the State for international protection and beneficiaries of temporary international protection in Fáilte Ireland-registered accommodation is 48,046, which is equal to just over 26% of all registered accommodation. Government plans to free up an additional 12,000 rental properties have been affected by the EU delaying plans for a new Airbnb registration process until the end of the year.

This very issue raised concerns within the sector, specifically the intertwined implications and the confusion that will undoubtedly arise with planning obligations if a tourist register for short-term lets is introduced. While there is some merit in registration and planning compliance for empty lets, local tourism industry representatives have huge concerns about the whole question of accommodation being bundled into this remit. These short-term lets provide facilities to students, professionals, relocators, doctors, nurses, interns and IT personnel who arrive in our country needing a short-term base before they secure their longer-term accommodation needs. It is very important that this legislation is not a one-size-fits-all instrument and that consideration is given to these types of short-term stays. The twinning of planning legislation checks and registration requirements has every probability to cause confusion and will have huge ramifications for home-stay accommodation providers. It will most definitely result in hosts either exiting the market or retreating offline, which will decrease transparency, safety and security for guests, as well as decreasing both the short-term and long-term availability of beds in Ireland.

Overall, additional supports are required. We need to help the hospitality sector, not hinder it. Domestic and overseas market investment is also essential to promoting tourism. Sales and marketing campaigns to maximise home holidays have also proved vital in helping businesses to survive and protecting jobs. It is vital, therefore, that Fáilte Ireland receives adequate funding, and I will support that investment.

Much has happened in recent years. For example, there is a ferry in Carlingford that started operating in 2017. It has invested €10.5 million and, all of a sudden, between Brexit and other issues, problems have arisen. There is a problem with communication. People think that when they come to the Border area to cross into Northern Ireland, they need a passport, and many tours have been cancelled, even from Dublin and our own wee county. There are many issues and problems at the moment. Can the witnesses tell me how the tourism industry is going to combat these? What kind of communications are the tourism organisations putting out, even for a simple thing like people thinking they cannot cross the Border without a passport?

Mr. Eoghan O'Mara Walsh

I might defer to Ms Andrews, whose members focus on bringing in overseas business with the ITOA. There are so many aspects to what the Deputy talked about. Some are controllable and some are uncontrollable, but even the uncontrollable ones have unintended consequences for our sector. We talk about capacity shortages due to the humanitarian reasons, but that does not just push up price and it means there is a lack of availability full stop. As I mentioned earlier, there are tourism towns where there will not be tourism beds and they will miss out fully on the tourism activity.

I might loop in Ms Andrews, who can give the perspective from the overseas markets, because it is from there that many of her members bring business into the country.

Ms Ruth Andrews

I want to support the conversation in the room in terms of the international tourism piece. I have 37 members who have delivered almost 700,000 holiday visitors to this country over the last number of years. Our issue is primarily around the shortfall of accommodation capacity, particularly in rural Ireland and, as Mr. Gibbons pointed out, when demand remains at a very strong level, we are simply unable to satisfy that. That affects inbound tour operators as much as it does the visitor attractions that we support and the wide range of activity providers, restaurants and entertainment venues to which we supply significant business across all of the regions.

We are now in a position whereby we are unable to do that at a level that can satisfy the demand from our overseas markets. We are already under pressure to convert business and meet demand for the peak season months. This is simply down to the fact we cannot get accommodation. There is no doubt that the capacity constraints we currently have are putting upward pressure on pricing. We all are aware that pricing has increased across the tourism industry, not just in Ireland but throughout the Continent as well. Ireland is not necessarily any more expensive than some of our key competitors. Where issues start to arise is when we have the additional complexity of not having the 32% capacity in the hotel space. That puts upward pressure on pricing at certain times of the year.

It is also important to recognise that pricing is dynamic. The price of a hotel room, rental car or a visit to an attraction varies from season to season. It can even vary depending on the time of the week. That has always been the case and it is not unique to Ireland. It is just a fact of how we do our pricing within tourism generally. We must be cognisant of that when we talk about pricing and price increases. There is no doubt that as long as we have capacity constraints, supply and demand absolutely will impact on price.

On the Deputy's point about cross-Border and all-Ireland tourism, ITOA members have been doing business for decades that involved selling the island of Ireland. In the year of the 25th anniversary of the Good Friday Agreement, it is terrific to see how that business has grown on an all-island basis. There can be confusion about what is needed for crossing the Border and there are impacts and a fallout from Brexit. European visitors must now have a full passport to enter the UK. Many of them travel on the Continent without needing a full passport. That certainly is an impact of what has happened as a consequence of Brexit.

From our perspective, we are there to ensure the messaging is clear. We work closely with Tourism Ireland across all the primary markets to ensure people are clear about that. There are concerns about the electronic travel requirement the UK Government is introducing. It will not be introduced until 2024 but it will cause some degree of confusion, particularly for tourists who arrive in the Republic of Ireland before travelling to the North. In fact, 70% of visitors to Northern Ireland arrive first into the Republic. We will have to make sure there is clear messaging around that. We hope some consideration may be given to an exemption for tourists who arrive on that basis. I assure the Deputy we will do everything we can, working with Tourism Ireland, Tourism NI, Fáilte Ireland and all our colleagues, to make sure we communicate a clear message about all-Ireland tourism and encourage people to come to both sides of the Border.

Deputy Peter Fitzpatrick

During the pandemic, people got into the habit of staying in the country rather than going overseas. We probably have the best country in the world for scenery, golf clubs, food and different types of attraction. Although I am not a drinker, the craic to be had in the pubs is second to none. We have something really great to offer. People stayed in Ireland for their holidays during the pandemic and found some fantastic value across the different parts of the country. However, once the pandemic eased off, prices suddenly doubled. If Ireland gets a name as being expensive, that will not help us. I see a lot of American and English people coming here and saying Ireland is expensive. We cannot afford to get the name of being expensive. There are a huge number of SMEs in this country and there are many people who need tourists to come here. What is going on at the moment? All we read in the newspapers is that hotel rooms in Dublin cost €1,500 or €2,000 a night. People do not read the small print; they only see the headlines stating that Ireland is an expensive country. We must get out there and communicate the right message about the country we love. I used to go out of the country a lot for my summer holidays. The only thing this country does not have compared with other countries is good weather. In recent years, Ireland has put a real effort into attracting tourists, but it has become very expensive here. How can we change people's perspective that this is an expensive country?

Mr. Paul Kelly

The data on domestic tourism are important to note. Before Covid, domestic trips accounted for 51% of all trips taken by Irish residents, with 49% accounted for by overseas visits. In 2022, even though we all saw the rush to Dublin Airport once travel restrictions were lifted and people tried to get to the sun, go skiing or whatever they wanted to do, domestic trips accounted for 57% of all trips taken by Irish people. That is a phenomenal increase on pre-Covid levels. We do not necessarily expect that high level to continue but we are hearing positive things from the industry. People have built new relationships with customers and they are very good at working with those customers to encourage them to return. The level of intent domestically is holding up quite strongly. As the Deputy suggested, value will be important to convert that intent into bookings. Domestic tourism had a very robust performance last year and it certainly has the potential to do the same this year.

Mr. Niall Gibbons

I reiterate the point made by Ms Andrews about cross-Border tourism and the capacity to travel freely across the island. This is a point of which some people may not be aware. We have done a lot of work around the globe over the past while in informing people about the common travel area. The UK Home Office has made an announcement that what is known as the electronic travel authorisation, ETA, will come into force in quarter 4 of this year for Qatar and in quarter one of next year for the United Arab Emirates. This system means non-Irish or non-British nationals who want to travel to Northern Ireland via the Republic of Ireland will need an ETA, for which they will have to register and pay. This is potentially a significant barrier to all-island tourism development. It has been flagged with our colleagues in the Home Office, and our colleagues in Northern Ireland are well aware of it. A total of 70% of people who go on holidays to Northern Ireland from North America and mainland Europe go there via the South. The ETA has the capacity to disrupt much of the progress we have made. We need to keep an eye on it.

Deputy Christopher O'Sullivan

I return to the issue of price spikes. Senator Cassells aimed much of his questioning on this issue at the representatives from ITIC. To give some balance, I will address my questions to the witnesses from the Irish Hotels Federation. Mr. Kelly mentioned the reputational damage caused by price spikes, price gouging or whatever one likes to call it. Many members of this committee have worked with members of the Irish Hotels Federation and other accommodation providers right across Ireland to make the case for the retention of the 9% VAT rate. I organised a very impactful meeting between members of the industry in my locality and the Minister for Finance, Deputy Michael McGrath, to make that case. We did so on the basis of the genuine challenges members of the hospitality sector, particularly in rural Ireland and the regions, were facing by way of energy costs, wage costs, etc. These mainly family-run hotels were not increasing their prices or practising price gouging. The Minister listened and the VAT rate was retained at 9%.

A few weeks later, however, St. Patrick's Day came and the headlines, once again and specifically relating to Dublin hotels, were that price gouging was back, with €600, €700 or €800 being at the lower end of what was being charged per night. The Minister was handed something of a hospital pass on this because he was not Minister for Finance when the original decision was made. That price gouging coming just a few weeks after the decision to retain the lower VAT rate was an "up yours" to the Minister. It was an insult to the owners of the family-run hotels in the regional parts of Ireland who do not participate in price gouging.

I wonder about the witnesses' thoughts on that. Do they agree that it is an insult and an "up yours" to the Minister and to the members who work so hard to keep their rates so competitive?

Mr. Tim Fenn

We acknowledge there is an issue around perception of last available rates. This is a challenge for the industry. We have to try to always maintain our value-for-money proposition. Hotels are very busy because they provide good value. The challenge we have here is we have many spike nights or compression nights, particularly in Dublin. Dublin has 23,000-odd hotel bedrooms. There were nights in recent weeks where we had a St. Patrick’s festival, the Six Nations grand slam match in the Aviva and mother’s day all happening at the same time. We do not have the rooms to handle all those events at once. The challenge then is there is a significant focus on the price of rooms that do not exist.

Deputy Christopher O'Sullivan

I have heard all this before and have heard the argument that, compared to Paris, our prices have on average increased by less. That is very true but, still, price gouging is happening. Does Mr. Fenn agree that what those hotels practised was a show of bad faith to those who worked to retain the 9%?

Mr. Tim Fenn

The issue for us is the focus on the last couple of rooms that are out there and maybe some outliers. The Deputy will appreciate we have no role in pricing. We do the best we can to improve the trading environment and make sure there is-----

Deputy Christopher O'Sullivan

That brings me to my next question. The last time we discussed this we asked the IHF to write to its Dublin-based members to ask them to desist from price gouging. Mr. Fenn mentioned at the time he could not intervene. Has he since written to Dublin-based members asking that this practice would stop?

Mr. Tim Fenn

The last time we were here we updated the committee on that. Last summer when there was an issue here, we sought legal opinion on this. We provided a communication to all the industry based on the concerns of the committee.

Deputy Christopher O'Sullivan

What did it say? Did it ask them to desist?

Mr. Tim Fenn

It said exactly what the Deputy said at the committee, as opposed to us saying it ourselves. We are always careful to make sure the IHF has no role in pricing or in sending a message to the market on pricing. We work on all other aspects of developing the industry.

Deputy Christopher O'Sullivan

I appreciate that but there is the role the federation plays in stopping this practice. Fáilte Ireland also took it upon itself to write to members but there has to be a focus on Dublin hotels. I appreciate we had that discussion previously and the effort was made.

Ms Campbell mentioned that UK demand was down. This question is for any of the witnesses who want to take it. I have heard on good authority that there was a recent meeting with Cork Airport officials and they are concerned about demand. There is good demand from Irish holidaymakers looking to go abroad and come back but in terms of coming to Ireland, and to Cork in particular, there is an issue. Do witnesses think that is linked to the lack of accommodation? Mr. Gibbons contradicted that slightly but I am hearing there is a challenge in terms of demand because of the lack of accommodation. Are the witnesses hearing that? Is there truth in that?

Mr. Niall Gibbons

There is no issue generating demand at the moment. There is significant pent-up demand to travel but we will find, particularly in the peak months heading towards summer, there will not be enough supply to satisfy the demand. That will happen everywhere.

Capacity in Cork Airport is higher now than it was in 2019. The team have done a really good job in expanding the number of routes that will be available coming into the summer months. The tricky bit is that, nationally, air capacity will be at 102% of 2019 levels heading into the summer but the available accommodation capacity will be less.

Deputy Christopher O'Sullivan

I agree that Cork Airport has done fantastic under the pressure of building a new runway and has turned things around in increasing routes. It is fantastic to see. The lack of accommodation will result in visitors not coming here and have a wider impact on the economy.

Mr. Niall Gibbons

It is not just Cork but will happen in other parts of the country. There will be pinch points in the summer market; for example, the Notre Dame-Navy game is happening in August. Between 35,000 and 40,000 people can be expected to come. That will be another compression weekend.

Deputy Christopher O'Sullivan

I have two final questions for the Department. The first concerns the uptake on the accommodation recognition payment, which went up to €800. Part of that was an effort to take those seeking refuge out of hotels and tourist accommodation. Has that been successful? Is it working? Is it freeing up beds in hotels and tourist accommodation?

Mr. Cian Ó Lionáin

That is not managed by my Department, but the Department of Children, Equality, Disability, Integration and Youth is examining various streams to encourage accommodation options outside of the hotel sector. For instance, it offers a home scheme, which I understand is being managed by the local authority system. It also operates an online portal for other individual offers of accommodation. On the specifics of the accommodation recognition payment, it is not managed by my Department so I do not have a line of sight on it but we will talk to colleagues in the Department of Children, Equality, Disability, Integration and Youth and come back to the Deputy with information on the uptake levels.

Deputy Christopher O'Sullivan

We have some people involved in short-term letting in the Gallery today. They are here because of an issue that has been touched on, namely, registration. Everybody welcomes the registration of short-term letting property but they want to outline the impact it will have on what they do, the important incomes they get and the important role it plays in rural parts of the economy, which we have discussed.

In answer to Senator Malcolm Byrne, Mr. Ó Lionáin mentioned that the time afforded by the decision of the Commission to push it back to December may offer an opportunity to put in place mitigation measures. Could that include some form of planning exemptions for certain types of short-term let? At the moment, if they apply for planning for short-term rental accommodation, they are being turned down.

The example I constantly give is where somebody may have originally had planning for a granny flat and their parents may be deceased; therefore, they have sought to use it for supplementary income. Having seen the legislation coming down the line, they have gone for planning and in no uncertain terms are being told by local authorities that under no circumstances will this get planning. It cannot be used for long-term rental accommodation either because it does not have planning for that. Could exemptions like that be included in any measures?

Mr. Cian Ó Lionáin

The current position is that colleagues in the Department of Housing, Local Government and Heritage are working on updating the planning guidelines on short-term letting to bring more clarity to this and ensure consistency of approach, which will be important, across local authorities. On planning permission exemption requirements for properties, both in rent pressures zones and not, for us it is important to differentiate between areas where housing need is greatest and areas where tourism need is greatest. We are looking for an update from the Department of Housing, Local Government and Heritage on how that planning guidance is progressing. Before the TRIS standstill period was extended, the intention was to have draft guidance available in the next month or two. We will go back to that Department and ask what the progress is and how the extra time will be used to take as strong an account as possible of all the concerns raised by the ISCF and other stakeholders around the country. We will get an update and hopefully there will be an opportunity for the committee to engage with that Department on those planning guidelines.

Ms Denyse Campbell

I will reiterate and expand on what Mr. Fenn has said. We are grateful for the support we have received, especially those of us from Cork. We know the Deputy played an instrumental role in supporting our industry. In my opening statement I used the example of the GB market being our biggest market. Some 42% of our business came from the GB market in 2019. If 60% of our members say they are not seeing business coming back as quickly from that market, that is a concern for us. We are not saying it is because of a lack of availability. Obviously, they are hit with inflation, the cost of living and the other measures in their country, so their discretionary income is at stake. They might not come for a second visit to Ireland, or they might stay for two nights instead of four. That is what we are emphasising.

Deputy Christopher O'Sullivan

I appreciate that and I thank the witnesses for their responses. I engage with the IHF a lot, and its branch set-up is fantastic. It is certainly educational. This thing with the price hikes is going to cause clashes and I guess that is not what anybody meant.

An Leas-Chathaoirleach

I will jump in briefly to ask the Fáilte Ireland CEO about his role in promoting transparency and fairness in pricing of tourism services and products in Ireland. Can he give the committee an outline of how that is done?

Mr. Paul Kelly

As part of the registration process, accommodation providers are required to submit a scale of charges. This scale of charges effectively sets that can be charged for certain room types. Accommodation providers are required to display those on their premises in a prominent location. That is part of the annual registration process, and we have 100% compliance with submission of those scale of charges. We conduct spot checks to make sure people are remaining within that. In reality, businesses only have an obligation to send their scale to us, but what they set it at is up to them. That is a commercial decision.

An Leas-Chathaoirleach

When it comes to spot checks, are there any consequences or penalties to ensure businesses remain within a fair and reasonable price?

Mr. Paul Kelly

Yes.

An Leas-Chathaoirleach

What are the consequences?

Mr. Paul Kelly

Ultimately, businesses can come off the register.

An Leas-Chathaoirleach

Have any businesses come off the register?

Mr. Paul Kelly

We have had, but not recently. There is very high compliance with the scale of charges. For example, we have conducted 268 spot checks since the start of the year. We found four incidences within those 268 where prices were being charged in excess of the scale of charges. In terms of our investigation, they were genuine mistakes from reputable providers. We have written to them and highlighted that.

An Leas-Chathaoirleach

Would the four hotels be put into the public domain, in the interest of fairness, as a result of non-adherence to their prices?

Mr. Paul Kelly

If there is a pattern of repeated breaches, then we can escalate to putting details into the public domain, and to fines and de-registering.

An Leas-Chathaoirleach

Is it light regulation, or how would Mr. Kelly describe it?

Mr. Paul Kelly

As part of what I was writing to-----

An Leas-Chathaoirleach

Is it tough regulation?

Mr. Paul Kelly

To be honest with the committee, it has been lighter touch. However, in the letter I sent to all registered providers before Christmas, I advised them we would conduct more spot checks. We would demand full compliance with the registration by a certain date before we chased people up when they had missed deadlines to submit their scale of charges. Following that letter we received all of the scale of charges faster than we normally would. We are conducting more spot checks. We have toughened our stance in that regard and the publication of that scale of charges will be more visible in future.

An Leas-Chathaoirleach

On that subject, we have heard from the IHF about the issues concerning the last remaining rooms. Mr. Fenn has described these as outliers in relation to the business. However, in terms of its members, what is the IHF doing to engage with the businesses that continue to do this and bring the federation into disrepute?

Mr. Tim Fenn

It is important to understand, and the committee will appreciate, that we have no role-----

An Leas-Chathaoirleach

I understand that, but does the IHF refer these last few rooms to Fáilte Ireland?

Mr. Tim Fenn

We do not do spot checks. If we get a complaint from a member of the public, we will pass it on to Fáilte Ireland.

An Leas-Chathaoirleach

Has that been done in the past?

Mr. Tim Fenn

Yes.

An Leas-Chathaoirleach

How many?

Mr. Tim Fenn

I do not have any metrics on that. There would not be that many, but there would be one every couple of weeks.

An Leas-Chathaoirleach

What regions are most impacted by price gouging? Where does it happen most?

Mr. Tim Fenn

Sometimes it is the pricing, but sometimes it is other issues. It can be down to whether a dog is allowed in a room, or whether there are too many dogs or not. It is that kind of stuff. We receive all manner of queries that we pass on to Fáilte Ireland.

An Leas-Chathaoirleach

Does Fáilte Ireland do spot checks online, as opposed to the actual register?

Mr. Paul Kelly

Yes, we do, and the IHF has no role in that. Individual businesses register with us and submit the scale of charges to us. As I have said, we have toughened up our spot checks on that.

An Leas-Chathaoirleach

Have any penalties been issued to hoteliers in the past two years?

Mr. Paul Kelly

I need to check whether we have issued any in the past two years. I am not 100% sure. However, I stress that even with those last available rooms the issue is that the hoteliers are aware of things like-----

An Leas-Chathaoirleach

Mr. Kelly has to understand-----

Mr. Paul Kelly

If the Leas-Chathaoirleach will allow me to finish, they are very aware that there will be peak nights, etc. They set the scale of charges to allow for that. The top of the scale of charges, therefore, is very rarely charged.

An Leas-Chathaoirleach

I understand.

Mr. Paul Kelly

There is high compliance with the scale of charges.

An Leas-Chathaoirleach

I want to acknowledge the contribution of Mr. Gibbons to Tourism Ireland. A new campaign was launched on St. Patrick's Day called "Fill Your Heart with Ireland." I congratulate him on that. I have a question about driving business into the regions. On the back of the announcement that President Biden is due to visit Ireland, what will Tourism Ireland do with the additional exposure this will provide it across American markets? This is especially pertinent to my constituency of Mayo, and we hope the President will visit at some stage. There is certainly a massive opportunity. Mr. Gibbons previously spoke about screen tourism. It is at the centre of what Tourism Ireland does now. Can he outline what the pipeline of campaigns will be around screen tourism, and the impact it has had on Achill Island, for example? How can Tourism Ireland and Fáilte Ireland promote the Wild Atlantic Way? Mr. Kelly may also contribute on this. How can both organisations promote Achill Island, the Wild Atlantic Way, and their beauty on both a domestic and an international scale?

Mr. Niall Gibbons

Our team was on a call to the Department of Foreign Affairs just before we came here. We liaise closely with them on any state visits. They give us an opportunity for exposure. This one is unique, obviously, with the President's Irish ancestry, and his connections with counties Louth and Mayo. There has been a significant increase in what I call genealogy tourism, particularly as a result of Covid when people were locked down. There was a lot more searching going on. It gives us capacity in that space. The biggest part of any promotion in these state visits tends to be the media corps that travels.

A significant media contingent will come with the president and it provides opportunities for rural areas. We are finding that there is greater interest in genealogy.

Regarding screen tourism, we have someone specifically dedicated within our organisation. We were out with the Minister, Deputy Catherine Martin, in Los Angeles this year launching a movie we had made ourselves, "Ireland", the movie, narrated by Liam Neeson. We also had an opportunity to connect with many people within the movie industry from Ireland who went out there and also people on the ground. We are finding that we are building relationships with people involved in the production and distribution in the background, so to speak, and the conversations are happening at a much earlier stage. If we were having this conversation ten years ago, the conversation would be coming in at the end when the film was being distributed. Now we are involved much more on the production side.

For example, Searchlight Pictures, which made "The Banshees of Inisherin", made that two-minute movie for us when we got in. We got them to talk about the characters and the landscape to bring the destination to life. Irish people will obviously think about Achill, but abroad it becomes more about Ireland. It is a great platform for all of us. It is a great opportunity to promote rural Ireland. The impact that film and screen have on an audience is significant.

An Leas-Chathaoirleach

Regarding twinning partnerships are there opportunities for Achill Island to bring focus to the area with other international destinations? Has Tourism Ireland done many twinning partnerships in recent months?

Mr. Niall Gibbons

We have a major twinning partnership initiative, an issue that started last year emerging from the Covid pandemic. I cannot think of Achill at the moment but I can come back to the Vice Chair on that. We twin regions of Ireland that have tourism potential with other areas. For example, Derry and Donegal are twinned with Great Britain. There are specifically rural initiatives that we use to twin with various markets abroad. We have capacity to change them around as well. I will need to come back to the Vice Chair specifically on Achill; I cannot remember it today.

An Leas-Chathaoirleach

I ask Mr. Kelly to comment on enhancing the visitor experience of the Wild Atlantic Way on the back of what we spoke about previously.

Mr. Paul Kelly

One of the challenges we are likely to have with Achill will be with visitor management more so than promotion. We continually work throughout the country to try to enhance the visitor experience with all the local authorities. Our new mechanism is what we call destination experience and development plans. We have a very exciting one in Clew Bay. That is where we align with all local stakeholders and local industry on the priority projects over a five-year time horizon to develop tourism in that region. For example, in Clew Bay, the Clew Bay looped cycle trail, building on the Great Western Greenway, is proving to be a very exciting project and is driving visitor numbers already. More work is continuing on that. We will continue to work on the development of Achill. We are in constant liaison with Mayo County Council on the proposed solution for Keem Beach in particular. There have been various different proposals about how we bring that fabulous landscape to life, some of which have been more problematic than others. It is on our capital project funding list once there is a proposal that is acceptable from an environmental as well as a visitor perspective.

An Leas-Chathaoirleach

I acknowledge the role of Achill Tourism in recent months. It has certainly put the island on the global stage.

Deputy Danny Healy-Rae

I welcome the witnesses to the meeting. What the Government did in passing this Bill to stop Airbnb and short-term lets and insisting on only allowing long-term lets is very regrettable. That is where the problem started for many of the people sitting behind me.

An Leas-Chathaoirleach

We are in pre-legislative scrutiny of the Bill; nothing has passed.

Deputy Danny Healy-Rae

I did not hear the Vice Chairman.

An Leas-Chathaoirleach

The Bill for the short-term letting is at the early stage of pre-legislative scrutiny. Nothing has been passed.

Deputy Danny Healy-Rae

This is where part of the trouble emanated from. A figure has been given that this will increase housing accommodation by 12,000 units. No one can answer where that figure came from and it is totally inaccurate. Fáilte Ireland is the body that will register these people. On whose direction did Kerry County Council send 600 letters to people stating that they must get planning permission in order to register? Who authorised Kerry County Council to do this? I know Kerry County Council officials are very busy and were very busy as it was. This is the route they have followed for the past five or six months. Where did that direction come from? May I ask that question, Vice Chairman?

An Leas-Chathaoirleach

Yes, no problem. Perhaps we might ask Mr. Ó Lionáin from the Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media to respond.

Mr. Cian Ó Lionáin

I thank the Deputy for his two questions. The 12,000 figure is only an early estimate. When we first started engaging with the committee as part of the pre-legislative scrutiny, we were asked for an estimate of how many properties could revert to long-term private renting. Fáilte Ireland did some initial work and came up with an initial figure of 12,000. It went back and did further work which we communicated to the committee in February, I think, indicating that it was 10,500, but that is only a potential 10,500. People make individual decisions when legislation changes. That is an estimate at this moment in time.

Regarding what Kerry County Council is doing as a planning authority, that is a matter for the council as the planning authority. As we have said in answer to previous questions, the Department of Housing, Local Government and Heritage which deals with planning is developing planning guidance in this area to give consistency to all the planning authorities throughout the country and how this will be implemented in areas where housing pressure is greatest and in areas where the housing pressure is not big and where tourism is more important. We in the Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media have consistently said that our focus is on getting a good register in place which allows the self-catering sector to develop well and for investment into it. There is a housing emergency which is why this initiative was listed under Housing for All. It is about trying to get the right balance between the housing need and the-----

Deputy Danny Healy-Rae

I have had enough of that story. Housing is one problem and tourism is another problem; they are two separate issues. The whole thing has gone wrong by trying to mix one up with the other and blame one for the other. The planners in Kerry County Council have clearly stated to anyone who inquired that it will not grant permission to enable people to apply. No one has a bother about being registered but when they inquired about actually going for the planning permission, they were told they would not get it in certain places, including Killarney town. I heard Mr. Ó Lionáin speak about the treatment of areas where more tourists go. I will just name one place. Gneevgullia has about three short-term lets through Airbnb or whatever. They were providing income to the local shop - the shop has gone now, by the way - and to the couple of pubs that were there. They were providing income to the post office and whatever. Now they have been told they will not get permission. Do they not have statutory rights when they have done this for more than seven years? Many people are at it for the past 20 or 22 years. It is wrong to think that to help one part of our community we must hurt another. Can we not deal with the housing issue separately and allow you to deal with tourism? This is very unfair. It is it fair to limit tourism to certain people? At the same time, 38% of hotel rooms in Killarney are taken up by the unfortunate people from Ukraine.

There are no other empty beds to accommodate them since they came here to, so it is there they will have to stay. Does that not jeopardise our tourism sector? We are only a week on from St. Patrick's Day and there is a scarcity of beds in Killarney. At the same time, there is a move to limit Airbnb operators and other short-term lets and to say they must let long term. How can that be fair?

Mr. Paul Kelly

The Deputy suggested no one can answer the question as to where the numbers come from, but we are doing so. They come from people who have done the best possible job with the data available online to make the best estimate. People have worked hard to calculate that estimate and I do not want that work to be disrespected. That is where the number-----

Deputy Danny Healy-Rae

I am sorry but-----

An Leas-Chathaoirleach

Please, Deputy.

Mr. Paul Kelly

If I could finish, I did not interrupt the Deputy. That is where the 10,500 comes from. It is the best estimate we can produce in the absence of a register. As Mr. Ó Lionáin stated, it is an "up to" number because it is based on the number of stand-alone properties that exist. Many of them will not be appropriate to be turned into long-term, residential-type property, so we have always said it is an "up to" number in terms of its scope. Until properties have been registered and the planning authorities have gone through their processes, we will not know what the number is. All the register is seeking to do is provide visibility to everyone. We certainly do not want to limit tourism accommodation. We want to grow it, and we believe having all properties registered will be beneficial. We in Fáilte Ireland do not have sight of the quantity of accommodation that is available in counties, which limits our ability to invest, support and make business cases for further investment to support growth in tourism. Having a national register will facilitate us in growing, supporting and expanding the sector over time. We would be lying if we did not say there are urban areas where apartment blocks were built and developed with a view to their becoming long-term residential units and where many of those units have been flipped into short-term, tourism accommodation, and that takes away from the stock of available housing. There is a connection in that regard in certain areas.

As for the process of sorting that out, it is not a job for Fáilte Ireland. We want to provide visibility, but sorting it out will come down to the local authorities and their application of the planning rules in their local development plans and so on. Many of the Deputy's questions are questions specifically for Kerry County Council and its application of the planning rules.

Deputy Danny Healy-Rae

We are putting the cart before the horse. Mr. Kelly stated these people, many of whom have been in the business for 20 years or more, have to register and get planning permission. As this is happening, and as they are being taken out of business given the way the sector has been set up, hotels are disappearing because of what I outlined. How can that be fair? All I want is fairness.

I listened to what was said about flats. That is a different issue, relating to Dublin and perhaps other urban areas. It is not anywhere in Kerry. It is unfair to hurt all these people who have provided a wonderful experience for tourists over the years. I am not blaming anyone personally - all the bodies seem to be joined up, whether it is the tourism or housing Department or whatever – but they do not have their houses in order and they are hurting a lot of people. They are going to hurt our tourism product.

Mr. Paul Kelly

I might just add, to ensure the record is correct, that as part of the proposed legislation, there will be a six-month clarification period. People will not need planning permission to register. I acknowledge we are still in the legislative process, but should the legislation come in as proposed, people will be able to register without any planning requirement. That will give both property owners and local authorities time to sort out their position with regard to planning permission. I do not want people thinking they will not be able to register initially without planning permission, although much will depend on what shape the legislation takes. It was an important proposal of ours that we would allow time to resolve that issue and allow people to continue to do business while the issue was being resolved. The committee has rightly identified the importance of the planning guidelines for issues such as the length of time people have been in the tourism industry and whether they are rural or urban and so on. A lot of that will, I hope, be clarified through planning guidelines.

Senator Malcolm Byrne

We have had some discussion of short-term lets but I am reassured by the fact that over the next nine months, there will be a period to reflect on the concerns expressed by the committee, so I hope they will be addressed as part of that. I expect the Chair will probably offer his accommodation on Airbnb to Joe Biden's secret service in the coming months.

The issue of career paths and challenges arising from vacancies in the sector was raised previously. Energy and skills shortages are often raised, and we talked previously about some of the matters on the visa side, which have been improved. Ms Campbell might comment on the skills side and Mr. Kelly might address the issue of career paths, which is a crucial one for the committee.

Ms Denyse Campbell

Regarding employment levels, our latest data indicate we are probably at 94% or 95% of the 2019 levels, so there is a gap of approximately 6% for vacancies at the moment. We have worked hard to recruit since we reopened, and the Senator will recall that when we reopened, we rebounded more quickly than we had expected, so that has resolved itself. While there is a gap, it is not as major as it was, say, ten months ago. At the moment, we are experiencing a skills shortage. Mr. Fenn might speak to permits and the work we have done in that regard, but from our perspective, a lot of hotels are focused on training, upskilling and providing career paths and opportunities for their people. All our branch networks work daily with Fáilte Ireland. We in the IHF have our own Skillnet, which has been very successful since it was launched in 2020. We have training available, including both bite-sized training and accredited training with Griffith College, among other examples, and we are making great headway in that space. It is somewhere we need to focus on because of the skills shortage. Unfortunately, that shortage is sometimes evident in properties but we are making great progress on it.

Mr. Paul Kelly

I fully concur with everything Ms Campbell stated. The employer excellence programme that Fáilte Ireland launched last year has had a very positive response from industry and more than 20,000 employees in the industry are now working in companies that have engaged in that programme. That is enhancing the overall attractiveness of the sector and celebrating the really good practices that exist as well as improving them throughout the sector.

We are hoping to expand that further this year.

In addition, we have just recently launched Learnify, which is a new, best-in-class learning management system. Working with the industry, and in parallel with and complementary to initiatives such as the Skillnet programme the IHF runs, we will provide career paths and have modules that people can do online while working, which will help them. If, for example, someone wants to move from being a food and beverage server to a food and beverage division manager, he or she can look at what courses and modules are required and then go online on Learnify and do them. The employee will be able to track it, as will the employer. If the person then decides to go from being a food and beverage manager to being a general manager, he or she can find the modules needed to do that, etc. We are mapping out those career paths and providing prompts to people using the latest and best online learning management system technology. That is a very exciting development. We are only just launching it at the moment but it is going to be transformative in facilitating continuous professional development in the tourism industry.

Senator Malcolm Byrne

As Senator Cassells said, there has been very active engagement. We are conscious of the impact that Covid-19 and the conflict in Ukraine have had on the tourism sector, and we have been very supportive. We will continue to engage in that dialogue. I am going to make a political point here that the witnesses will not be able to comment on. They may notice that the engagement in these committees tends to be with representatives of the Government parties. The Government has been very supportive of the tourism sector and the parties in Government have been very supportive. The witnesses can read into that what they want. The challenge for us - and this is the point my colleagues have been making - is that for us to continue to argue for and recognise it as a good value sector, providing excellent employment and so on, we also need a response from the sector. We are hearing from constituents and internationally that Ireland is - to use Mr. O'Mara Walsh's description - not a good value destination, is expensive and that the cost of hotels is too high. One can produce all the data one wants but if we get that reputation, it becomes a big problem.

The committee wants to work with Fáilte Ireland and if any support is sought on the skills side or energy side, the Government will respond but we have to hear a response from the sector in ensuring good value. I know prices cannot be fixed but, as I have said previously, in the industry, those who are price gouging and damaging the sector need to be called out. We are the ones who get it in the neck as much as the witnesses do but, politically, it makes it really difficult for us to make arguments on behalf of the sector.

An Leas-Chathaoirleach

Ms Fitzgerald Kane wants to contribute, after which I will give each of the witnesses a minute or two to say a final word.

Ms Elaina Fitzgerald Kane

I thank the members for the points they have raised. There is a lot of positive work going on and congratulations are due to Fáilte Ireland on its brilliant employer excellence programme. There is a lot of work being done with transition year students as well. I see this work in the context of our hotel. It is amazing how a career can start right there when people have mentored opportunities. We are very grateful also for the training opportunities provided through the Department of Further and Higher Education, Research, Innovation and Science. It is really positive.

At the last check, and Fáilte Ireland may be able to confirm this, there were 22,000 vacancies in Irish tourism. That is going to inhibit our ability to grow. One area we need to look at is the permit application system. There has been a lot of talk about the critical skills list and whether, for example, chefs be on it. I will give two examples. We have two great guys working on our pastry team. Both are with us for their permit. They want to bring their families here and there is no opportunity to do so. While their skills may not be considered to be critical in the same way as the skills of a heart surgeon are, that issue needs to be addressed because we are going to lose that talent in two years, which makes no sense. Reunification is important for people when they are plotting out their careers. These are people who are contributing to my business and businesses across the country. I hate to think we are going to lose that talent in two years' time. That issue requires attention.

I would like to comment on an issue raised earlier. Fáilte Ireland has stated that for every euro a tourist spends on accommodation, €2.50 is spent in other parts of the economy. When we look at some areas where there are very high levels of concentration around contracts, be it particular communities like Donegal, Kilkee or Youghal - I am sure this is replicated across the country - those businesses are going to suffer over the summer. We need to expedite looking at what measures we can put in place to provide assistance, particularly at the peak level of contracting that will be reached in the next few days. That ultimately determines the fate of these businesses, not just for this summer but beyond that, and we need to address the issue. In the same way, we need to look at car rental, the VAT equalisation measures that need to be put in place if we want to be competitive and the businesses that, through government contracting, no longer have the opportunity to be involved tourism. That is very important.

We have spoken a lot about value proposition today, and rightly and understandably so. However, we have to look at all the other issues, including people, which was brought up, and sustainability. We have a national tourism development plan coming and it is critical that we do not lose sight of where we are going beyond the summer. We have to grow. Where is the next version going to be for us?

An Leas-Chathaoirleach

I thank Ms Fitzgerald Kane. Senator Carrigy wants to contribute briefly.

Senator Micheál Carrigy

I thank the Chair and apologise for being late. I was in and out of other meetings. From reading the opening statements and looking into the figures, they show that before Covid, we had 11.3 million annual visitors, €5.9 billion was spent in tourism and the sector employed 325,000 people. It is important to acknowledge the work done by both Tourism Ireland and Fáilte Ireland to deliver those figures and employment to the State. I wish Mr. Gibbons well in his retirement or semi-retirement, whichever it may be.

I fear for the future, to be honest. We heard the figures will return to 2019 levels by 2025. I honestly do not think that will happen - it will not happen. We heard about the challenges we have with accommodation and that people are deciding to go to other countries. People cannot get booked in. I know people involved in running bus tours who are losing contracts because people are deciding to go to Scotland, Wales and places like that, rather than coming here.

It is a pity that a small number of hotels are damaging the rest of the industry. I was away three weekends ago in the Connacht Hotel in Galway. It was packed and we got great value. That was the weekend before St Patrick's weekend, and in a major tourism centre in Galway. There is value to be got out there. Unfortunately, a small number of hotels are giving the entire industry a bad name but members know that is not the case throughout the industry. That is why we have always been very supportive of maintaining the VAT rate, and there was strong cross-party and Government support for introducing it.

On careers and vacancies, I spoke to my local education and training board, ETB, only a couple of weeks ago. I also spoke with Ms. Campbell from the Irish Hotels Federation and the Restaurants Association of Ireland about trying to develop a centre of culinary excellence in the midlands, which would service the tourism and hospitality industry. However, the ETB tells me it cannot even fill some of the existing courses and people are not taking those courses or coming into the industry. Has Fáilte Ireland met the Department of Further and Higher Education, Research, Innovation and Science and career guidance teachers? This seems to be an issue, not only in tourism. At the meeting I attended, we discussed the therapy professions, including speech and language and occupational therapy, and the reality is we do not have people coming through the third level system and qualifying to be employed in the system. The same applies in the tourism and hospitality industry. We need those working in our schools to get people to focus people on career paths where there are strong job opportunities. If we do not do that, we will start losing the levels of activity we built up before 2019.

We will not get back to where we have said we want to get to in respect of increasing our numbers by 2032. I think we will struggle to get back to where we were pre-2019. I ask the witnesses to respond to my question regarding discussions with the Department of Further and Higher Education, Research, Innovation and Science, the ETBs and secondary schools career guidance teachers. Have any such discussions taken place?

Mr. Paul Kelly

Yes, discussions are ongoing. There is a tourism and hospitality careers oversight group. We are lucky enough to have that structure at a sectoral level where we engage with the third level colleges, the ETBs and the Department of Further and Higher Education, Research, Innovation and Science. The Senator is right that it is not about a lack of available courses. We are operating in probably the most competitive workforce environment we have had in our lifetimes. Just this morning, the Economic and Social Research Institute, ESRI, warned about the economy overheating. Every sector is short of skills and the tourism and hospitality sector is no different in this regard. I refer to trying to attract people onto those courses.

Historically, one of the challenges has been that the reputation of the sector as an employer has not been as good as we would have wanted it to be. This has been a factor. Part of that was reality but much of it was also a misperception. Programmes such as our employer excellence programme that Ms Fitzgerald Kane just referred to are set up to try to ensure that, as much as possible across the sector, there are excellent employer practices and rewarding careers and full awareness and perception of this fact. The IHF has been working in this area for many years with its strong employment programmes. Much work is going on to try to attract people into the sector.

We have a transition year programme, to which Ms Fitzgerald Kane also referred, where we had hundreds of students placed last year via the Fáilte Ireland transition year portal. We ask the industry to provide placements and we link in with schools and ask them to make all their transition year students aware of these. This is a great way for people to get summer jobs and for the industry to bring in seasonal staff. More important, it is a great way for people to get a good and positive initial experience of the sector. There is, therefore, lots going on to try to improve the situation over time.

We are in an incredibly competitive work environment. We will need to continue to work on this and be as creative as we can. We are also linking in internationally through the EURES scheme to make people aware of the opportunities. We identified Spain and Italy as two markets with high potential to bring people from to work in Ireland. Of course, we come back to the issue of housing and the availability of accommodation if we are bringing in people from abroad, whether they are coming here on work permits or from the EU without needing such permits. The issue of accommodation is also a challenge. We are doing what we can.

Ms Denyse Campbell

This aspect is a major focus for us in the IHF. It is about amplifying the career opportunities in our industry. This is the message we need to get across and what we need to communicate. The Senator is right that this starts with the career guidance teachers. We had a career guidance teacher at one of the sessions at our recent conference. We talked about this very issue. She was a career guidance teacher from a school in Killarney. She gave us great insights. We are also working with Fáilte Ireland on career opportunities and collaborating with the organisation on how we go to trade shows or transition year projects in the context of insights and all those college opportunities where we can amplify the positives about working in our industry. Ultimately, we must amplify the fact that people can start off as a receptionist and become a general manager. There is no other industry where this can be achieved as quickly as in the hotel sector. That is an aim for us and we are prioritising it. It is one of my main focuses for the next 12 months.

Mr. Eoghan O'Mara Walsh

I will not delay proceedings, but I will return to the point regarding seeing a full recovery. I have a similar view to the Senator. We will not see a full recovery for several years. This is largely because for the next year or two so much of our tourism accommodation stock will be unavailable. The one thing I would love members to take from this meeting is that the biggest issue facing Irish tourism is the impact on supply of how we are dealing with the humanitarian crisis. One of my major frustrations is that we have not yet seen a comprehensive plan from the Government as to how refugees and asylum seekers are going to be housed. The Taoiseach has said that approximately another 50,000 Ukrainian refugees are expected by the end of the year. Where will they stay?

At the moment, 32% of beds are out of the equation. Will that figure rise to 38% or 40%? It is only right and proper that we have a very warm and generous response to this crisis, but the tourism economy cannot be the primary accommodation provider for refugees and asylum seekers. If it is, there will be significant unintended economic consequences and the livelihoods of all those downstream tourism businesses we talked about will be at risk. We talked about losing our value proposition and doing long-term damage. If we lose our tourism assets, there will be long-term damage for our industry that will be very difficult to repair. Members need to be mindful of that. There is no magic wand and no quick fix, but we have yet to see a plan in this regard. As I said, the tourism and accommodation sector will play its part. It is only right that we do so. We cannot, however, be the primary accommodation provider because the knock-on implications are devastating for parts of our community.

Senator Micheál Carrigy

I will give an example. I am the chair of Longford Tourism and we have for many years been trying to build up from the low base we were at. We have tried to build the product and build infrastructure on the ground to bring people to our county. CenterParcs has given us a huge lift in that regard. We have also worked a great deal on developing other projects, such as walkways and cycling, in trying to build tourism infrastructure to attract people to the county. The reality now is that if people come to the county, we do not have anywhere for them to stay. We are having our AGM tomorrow and this issue will be at the top of our discussion. If a group came to stay in Longford now, it is more than likely that they would have to travel and stay in surrounding counties.

On the issue of car rental, is the Government exploring any initiative around the VAT on vehicle registration tax, VRT, to try to alleviate this issue?

Mr. Cian Ó Lionáin

Yes. During last year's Estimates process, we had quite a detailed engagement with the Department of Finance on this issue. At the time, the case was not accepted but we will certainly make it again. Given the challenges tourism is facing, this could be done at a relatively modest cost to the Exchequer. Adjusting the VAT rate on VRT should accelerate the rebuilding of the car fleet. This is another major pressure point. The car fleet may reach 60% of 2019 levels by the height of the summer, but we have already reached 80% of tourist numbers coming in, so there is still this imbalance. To answer the Senator's question briefly, we will be pushing this point again.

Senator Micheál Carrigy

In reality, nothing can be done until the budget Estimates for 2024-----

Mr. Cian Ó Lionáin

That is unfortunately correct because it is a taxation measure, which falls under the remit of the Minister for Finance, but we will be pushing this case.

Senator Micheál Carrigy

On the issue of consultation and pre-legislative scrutiny of the Bill, it is positive that it has been delayed for nine months. I still strongly believe that we should push ahead with a register. This could be done in the medium term while discussions are ongoing about how to address the legislation. It is not the right time to bring it in. It needs to be parked. We discussed what was done in Scotland, where this measure was postponed for several years. It is important that we do so until we free up our hotel accommodation.

I will pose a quick query to the representatives of Fáilte Ireland.

An Leas-Chathaoirleach

We are tight for time.

Senator Micheál Carrigy

There are increased costs at a local level for projects Fáilte Ireland is involved in funding. The witnesses will probably be familiar with the likes of the Knights and Conquests Heritage Centre project in Granard in north Longford. It has been funded by Fáilte Ireland and the Government to the tune of nearly €3 million from rural regeneration funding. We have now been hit with significant increased costs in trying to bring this project across the line. Is this something Fáilte Ireland could consider? Is there an opportunity for further funding to be provided to these projects to match potential further funding from the Government to ensure delivery? Have any issues been identified over the last 24 months regarding other projects not proceeding because of increased costs?

Mr. Paul Kelly

I will come back to that in a moment, if I could just build on this point so everyone is clear. We require legislation to get the register up and running. The option of registering with Fáilte Ireland has been there for many years and Fáilte Ireland has engaged in many campaigns to try to get as many tourism accommodation providers as possible to register, yet we have tens of thousands of tourism accommodation providers who are not registered with us. We want to see legislation in place as quickly as possible to facilitate the establishment of that register. The points the Senator made around the timing comes back to the approach taken from a planning point of view, and our initial proposal was that there would be a six-month clarification period. There may be an argument to extend that but until we get a register in place and have an obligation on both the property owners and the platforms to comply with that, we will not have full visibility and transparency of this part of the sector. The register is not about increasing or reducing; it is about giving visibility to what is currently there.

Senator Micheál Carrigy

Could we proceed with legislation on that straightaway? Does it need to be in tandem?

Mr. Paul Kelly

Obviously we have to do that in conjunction with the European requirements, etc., and I know that the Department will write back.

Mr. Cian Ó Lionáin

Technically we could not proceed because we have this process whereby, because this affects the internal market, crosses borders, we have online providers of short-term letting accommodation are based in lots of different countries and because of the scale of the potential economic impact, the European Commission has the right to give its view. The Commission is also developing its own set of short-term rental regulations so it wants to make sure that what we would do aligns with theirs. While we have the legislation drafted and we are engaged with this committee on the pre-legislative scrutiny, we cannot proceed until the Commission comes back with its detailed commentary. It has said is that will be at the end of December this year. It could be earlier if its own regulations come in first because there will then have to be automatic alignment. We are caught in that waiting pattern but it does mean that our colleagues who deal with planning guidance in Custom House have a bit of additional time to take on board the concerns of the sector and to get that balance right between the pressing housing need and trying to maintain short-term tourism accommodation in key parts of the country.

An Leas-Chathaoirleach

I am conscious of time so I will ask Mr. Kelly to address Senator Carrigy.

Mr. Paul Kelly

With regard to capital projects, the issue of inflation is obviously a major one for all capital projects across the State and internationally. We have an instance where it is all about burden-sharing between the supplier and the State in terms of buying it. There are government guidelines in that area we are following, Within the funding of government, we have engaged proactively if there is an increase in a project cost, we generally take the approach that if we were due to fund 12.5% of a project at the outset, our 12.5% will go up along with the local authority funding and our rural regeneration development fund funding. It is about sharing any increase in costs in line with the percentage of funding and we are certainly open to that.

An Leas-Chathaoirleach

I thank Mr. Kelly. Ms Andrews wanted to come in and apologies we missed her earlier.

Ms Ruth Andrews

I thank the Leas-Chathaoirleach and I just want to reiterate Mr. O'Mara Walsh's response on the ability to recover. Let us not forget the tourism industry is still in recovery after two torrid years of the pandemic. A lot of businesses, particularly downstream businesses and businesses like my own, which are inbound tourism operators who could not operate at all for two years, are just coming out of the worst crisis and trying to rebuild. They have terrific opportunities to do so and the demand is there. Ireland is still a destination that has significant pulling power and there is huge interest. The work was maintained over the Covid-19 period in marketing the country and keeping that light on and making sure our partners, through the global travel trade system, were ready to go, which they were. They have come back in numbers. Meitheal happened last week and there was a terrific turnout from overseas buyers. The ultimate frustration is the fact that we cannot recover if 32% of our accommodation is not available to tourism. As long as that is the situation, we cannot recover to 2019 levels. It is just as simple as that and, therefore, we need to impress on everybody that there needs to be a solution. Tourism has its part to play in supporting the Government in the Ukranian refugee crisis and the need for accommodation. We all understand that the ultimate root of all of this is the housing crisis but tourism is bearing the greatest brunt in facilitating yet another crisis. Unless we can address this situation with a meaningful plan, tourism and many of the businesses within the industry simply will not be able to recover at the pace that they could have. We are here to recognise that the Government got us through the worst of times. We now want to return that investment to Government. We want to be able to stand on our own two feet. My members certainly do. The demand form the overseas market is there, the demand from the domestic market is thankfully there, but the biggest impediment we have, irrespective of price, is actually the availability of accommodation.

An Leas-Chathaoirleach

I thank Ms Andrews. That concludes today's public hearing. I thank all our witnesses for the evidence they have presented for the past two and a half hours. It has been very engaging and I hope we will have a very strong tourism and hospitality sector over the summer months. Again I thank each and every one of the witnesses for their time. I propose we now enter private session to deal with housekeeping matters. Is that agreed? Agreed.

The joint committee went into private session at 4.17 p.m. and adjourned at 4.32 p.m. until 1.30 p.m. on Wednesday, 19 April 2023.