Ireland needs 11,500 more hotel bedrooms in place by 2032 in order for supply to meet projected domestic and inbound tourism demand over the next decade.
That is according to an economic analysis conducted on behalf of the Irish Tourism Industry Confederation (ITIC).
The study was conducted by noted economist Jim Power.
In the study, Mr Power said: “Using 2019 as a baseline and applying a ratio of international visitors to the stock of tourist bedrooms at the time would suggest that 5,500 extra bedrooms will be needed in the next 10 years to maintain the ratio.
“Historically, there has been a natural attrition of 1%-2% (many industry analysts suggest that the attrition rate will be higher in the coming years due to the impact of Government contracts) of tourism bedroom stock in Ireland each year which would suggest a loss of circa 6,000 bedrooms over the next decade. Therefore, it is reasonable to assume that 11,500 additional tourism bedrooms will be needed in Ireland by 2032.”
Mr Power’s analysis added: “Currently, aside from some activity in Dublin and Cork, there is little appetite for new hotel construction due to high build costs, expensive sites, high cost of capital, and planning delays. A recent Cushman and Wakefield report on the sector in July 2023 stated that “construction and financial costs currently represent key constraints on further development in the Irish market.”
“Cushman and Wakefield estimates that 3,600 new hotel rooms are forecast to be delivered to the Irish market in the coming years but that “the vast majority of these new rooms (84%) are destined for the Dublin market.” It seems very clear that regional Ireland, in particular the 8 county area in the Midlands that will receive the Just Transition Funding of €68m, has very little in hotel development pipeline. If Government wants to address this problem, it will have to introduce various measures to encourage new hotel development particularly in targeted areas. Without such interventions, the lack of viability will prevent an increase in tourism accommodation from occurring thereby limiting economic activity, impacting jobs, and foregoing tax revenue to the exchequer. It will greatly undermine the impact of the Just Transition funding for the area.”
Suggested proposals include:
• Tax breaks such as Accelerated Capital Allowances or an EIS (Enterprise Investment Scheme) scheme for regionally targeted areas where Fáilte Ireland analysis shows a deficit in tourism accommodation.
• Changes to planning and regulation to facilitate development in targeted areas.
• Area Specific Incentives such as commercial rates holiday.
• Public-Private Partnerships should be explored with local authorities.
• Targeted Fáilte Ireland investment in attractions
