Dáil Éireann Debate, Tuesday - 21 June 2022
3. Deputy Imelda Munster asked the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media her views on the rising cost of tourist accommodation; and if she will make a statement on the matter. [32833/22]
Amharc ar fhreagra4. Deputy Peter Fitzpatrick asked the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media if she has plans to make any policy changes to assist inward tourism in respect of reported price gouging by various tourism providers for car rental, hotels, car parking, inbound flights and so on; and if she will make a statement on the matter. [32760/22]
Amharc ar fhreagraI ask the Minister to outline her views on the rising cost of tourist accommodation.
What plans does the Minister have to introduce policy changes to assist-----
Sorry Deputy, but Questions Nos. 3 and 4 are grouped and will be taken together.
My question is slightly different from Deputy Munster's question.
Yes, but the Minister will answer both questions.
I propose to take Questions Nos. 3 and 4 together.
While the recovery momentum in our tourism sector continues, inflation, other economic factors and the significant cost pressures on tourism businesses are likely to impede the recovery. In terms of international perception, there is a risk of damage to Ireland's tourism offering and the promotion of Ireland as a good value destination through negative customer experience arising from the issues and challenges within the sector post-Covid. Many of these issues and challenges, such as reduced services and higher prices as a result of inflation, energy costs, labour shortages, recruitment challenges and supply chain issues, occur in other countries around the world. We see them manifested in Ireland in a lack of affordable accommodation and car rental options in certain areas, and in delays at Dublin Airport.
While I have no regulatory function with regard to the operation of our airports or the car rental sector, I am very aware of the potential impact of negative stories on customer sentiment. In this regard, Tourism Ireland is monitoring sentiment in our source markets in terms of reputational impact as a result of pricing concerns based on consumer, media, industry, and trade feedback and is issuing a weekly report on this matter to my Department. As we enter the peak summer months and the tourism industry recovers, there is inevitably additional pressure on hotel capacity and pricing. Hotel supply in Dublin has been affected by a range of factors, some of which are short term. These include deferred business from the past two years and increased demand. Businesses are facing significant cost pressures due to inflation and other economic factors, all of which have contributed to higher prices than in 2019.
It is important that Ireland maintains its reputation as a value-for-money destination. Value is not just about the price the customer pays; it is also about what the customer gets for that price so that visitors are attracted back again and continue to recommend Ireland to family and friends. We cannot assume that 2022 will be a baseline for linear growth in future years because it is an exceptional year as we emerge from the Covid years of 2020 and 2021. Next year will present its own challenges as the pent-up and deferred demand that we are seeing at the moment might be dissipated. The distorting effect of the pandemic makes it difficult to definitively assess the long-term supply and demand situation but there does seem to be a clear need for more short-term accommodation supply, specifically in Dublin.
We all want to see the return of a sustainable and vibrant tourism sector and I must stress how important it is that businesses maintain a long-term perspective on competitiveness and value for money. The céad míle fáilte reputation that the sector has built up over the years is an important element of our tourism offering and must be protected.
With regard to assisting inward tourism, Tourism Ireland, as part of its marketing strategy, established a recovery framework which will be underpinned by an extensive programme of promotional activity throughout 2022. The organisation has a flexible, three-phase plan to restart, rebuild and ultimately redesign demand. Over €80 million will be invested in the programme in 2022, which will allow Tourism Ireland to ramp up its campaigns in key international markets.
My officials continue to engage with many stakeholders, including the Department of Enterprise, Trade and Employment, the Irish Tourist Industry Confederation and the Irish Hotels Federation, in order to further understand the underlying issues impacting the recovery of the tourism sector and to emphasise the importance of maintaining a strong value proposition at the core of tourism. Department officials are also working with the tourism agencies to identify potential remedial actions such as the reweighting of marketing campaigns to ensure promotional activity is aligned with supply across the year. Tourism Ireland's promotional activity right now is focused on driving demand for later in 2022. The Tánaiste and I co-chair the tourism and hospitality forum, which is due to meet next week. This will offer another opportunity to discuss and address the many issues facing both sectors.
Last week representatives of the Irish Hotels Federation appeared before the Oireachtas Joint Committee on Tourism, Culture, Arts, Sport and Media. They said that there was a faster rebound in tourism than anyone had previously anticipated. They said there was a very strong recovery, exceeding all forecasts, which is very welcome, so why the price gouging? Why the extortionate room rates that are being charged? Huge reputational damage is being done to our country in both the domestic and international markets.
I looked up accommodation for one night in July. In Dublin the price is €379 for one room for one night with no breakfast. In Madrid, a four-star hotel on the same night costs €120, meaning that Dublin is three times more expensive. In Lisbon, a room in a four-star hotel is €141, meaning that Dublin is two and half times more expensive. The price in Paris is €147 and in Amsterdam it is €141. This weekend, a room in Paris for two nights, from 24 to 26 June, is €208 for two people. On the same night in Dublin the cheapest room I can find for two people is not a private room but a bed in a dormitory costing €400. This is doing such damage, particularly to those hotels across the State that are offering good value for money, that are not engaging in price gouging and are doing all they can to encourage tourism.
At this stage, given that everybody is talking about it, is the Minister not concerned? One only has to go onto the booking sites where one can see and compare prices. The excuse they gave about inflation does not weigh up because if hotels in Europe are facing the same inflation costs as hotels in Dublin yet can offer value for money, then inflation is no excuse whatsoever. Is the Minister not concerned at this ongoing rip off? For most people the public opinion out there is that it just stinks of pure greed.
We live in a great country and we have great people, but we are not doing ourselves any justice. While at the same time it is not fair for me to comment on everyone with the same brush, the facts speak for themselves. The price of hotel accommodation and the costs of car rental, parking, food and everything else are going totally out of control. During the pandemic the country had an opportunity to put itself back on the map. The Minister referred earlier to spending €80 million on Tourism Ireland, which is welcome. I have met many people in my county of Louth who travelled here for the past number of years. They got some fantastic holidays. However, when they went to book it three or six months later to go back to the same place or a similar place, it was double or treble the price. The hotels did not want them at all, but during the pandemic they wanted us. It was mentioned earlier by Deputies that the simple thing is to go abroad but I believe that people want to stay in Ireland. If one goes abroad, one gets a flight, accommodation and a guarantee of weather, and it is a lot cheaper than everything else. People do want to stay in their own country too because this country really came together during the pandemic.
I have spoken with some people who came in from Canada a few weeks ago. With regard to the Dublin Airport Authority, DAA, which is a semi-State company, when they came in from Canada they waited seven hours to get their bags and everything else. That is happening on a regular enough basis. In tonight's debate we are just concentrating on Irish people, but these tourists are coming here and getting very bad vibes at Dublin Airport. What is happening? Are we getting value for money with that €80 million budget?
I thank the Deputies. I am concerned about any potential reputational damage to Ireland. We must be seen as a value-for-money destination so that people would want to return. Neither my Department or Fáilte Ireland have any role in setting the prices for accommodation. Commercial decisions such as pricing are the sole responsibility of business owners. I would continue to urge accommodation providers to be mindful of that longer term picture with regard to competitiveness and value for money.
I believe the distorting effect of the pandemic makes it too difficult, as I have said, to robustly analyse the long-term supply versus the demands to meet currently.
Reference was made to Europe. Our hotel occupancy in Dublin is now one of the highest in Europe. It is driven by a range of factors, some of which are short term. I believe that in Dublin we have been running at 10% above Paris, Amsterdam and London in recent weeks. That shows the demand that is there. Pricing is, ultimately, a commercial decision for each business. We do not have a role in that but I would urge accommodation providers to be very mindful of the need to attract tourists back. I believe that what is happening now is probably due to the pent-up demand from the past two years.
On the costs of car rental and the issues with the Dublin Airport Authority, of course I am aware of these. The DAA issue is an operational matter for it. It may be more for my colleague, the Minister, Deputy Eamon Ryan.
On the car rental costs I have no remit there but I have had-----
I ask that the Minister would stay within the time limit of one minute.
People are comparing prices, whether it is European cities or coming to Ireland. They will see the vast difference and they will see that Ireland is no longer a value-for-money destination. In its submission to the committee last week the Irish Hotels Federation said - in black and white - that at weekends and on nights when there are major concerts or events "there are now more nights where occupancy in Dublin exceeds 90% and the last available rooms are quoted at rates in excess of the average [daily room rate]". That is an admission of price gouging, in black and white. The Minister has said she is concerned about international reputation. The Lonely Planet has just posted a very critical review on Ireland that refers to the "soaring costs", including for hotels, that are "wreaking havoc" with holiday makers' budgets. It is out there. This short-term greed is doing long-term damage.
It must be borne in mind that the hotel sector has received the continuance of the 9% reduction in the VAT rate. It was also flagged that other countries' hotels that are not playing ball and offering value for money are being separated from the 9% VAT rate. It is doable. Should these extortionate rates continue, which are multiples of increases that other European countries are offering, and if the rates continue to cause reputational damage as a value-for-money destination, will the Minister consider removing hotels from the reduced VAT rate if they do not start to offer value for money?
As I said earlier, it is a great country. Ireland is known as a great sporting country. We do very well with the GAA, soccer and rugby. It is also great to see that our soccer teams and our rugby teams are looking to bring world cup, European cup and UEFA cup competitions to Ireland, which is fantastic. There are also plenty of concerts in the Aviva Stadium and Croke Park, with all of the superstars coming in. Ireland has always been known for having fantastic restaurants, especially with our fish, and so on. However, people do talk. The problem we have at the moment is that people are not talking about the great sport, concerts or food. They are talking about the prices. I am really alarmed at the moment that Tourism Ireland is getting €80 million. Where is the €80 million going? There is something seriously wrong. I used to go abroad but over the past number of years I have holidayed in Ireland when the value for money was good. The situation now, however, is putting people back on aeroplanes. We have seen it getting totally out of control. It is up to the Minister to call them in and see what the problem is.
My Department officials have engaged with the Department of Enterprise, Trade and Employment, Fáilte Ireland, Tourism Ireland, the Irish Tourism Industry Confederation and the Irish Hotels Federation on this very issue.
On the VAT question, I would point out that the reduced VAT rate applies to a wide range of businesses in addition to the hospitality sector, many of which are still trying to rebuild after a very difficult and stressful two years. These include catering, restaurant supply companies, tourist accommodation, cinemas, theatres, museums, historic houses, open farms, amusement parks, certain printed matter, and hairdressing. While no option should be off the table in the context of encouraging price moderation and a strong focus on a good value-for-money proposition into the medium and long term, it is likely that a disapplication of the extension of the reduced VAT rate would damage many hotels around the country. The extension of the VAT reduction is providing an important support to rebuild.
Nonetheless, no potential option should be off the table, as the protection of the value-for-money proposition in Irish tourism is a critical priority for the years ahead. I will be making that very clear at the Hospitality and Tourism Forum, which the Tánaiste and I will be co-chairing next week.
