Kelly Slates Hotel ‘Price Spikes’

The chief executive of Failte Ireland, Paul Kelly, is writing to all registered providers of tourism accommodation to inform them that Fáilte Ireland will have a renewed focus on compliance with their submitted scale of charges in 2023. In the letter, he is asking every individual business to consider the wider implication of its price setting models and reminding them that Fáilte Ireland "knows from bitter experience", that if Ireland's reputation as a good-value destination is damaged, it will take many years to recover. 

Addressing the Joint Oireachtas Committee on Media, Tourism, Arts, Culture, Sport and the Gaeltacht, he said that "we are seeing an increase in the frequency and scale of price spikes in the accommodation sector, often coinciding with concerts and sporting events. These price spikes lead to both reputation damage of the sector within Ireland and damage to Ireland’s reputation globally for offering value for money". 

He continued:

"When Fáilte Ireland last appeared before this Committee in June on this matter, I informed Members that our remit in this area is to ensure that accommodation quality standards meet visitor needs and that commercial decisions on pricing are the responsibility of the business owners. These pricing decisions are driven by a combination of factors that include the costs that need to be recovered and the competitive price the market will bear based on the balance between supply and demand. 

"Since June both these factors have deteriorated, input costs have increased at an unprecedented rate and the amount of tourism accommodation being used for humanitarian needs by the Government is also at an unprecedented level. 

"Both these factors mean we are likely to see significant increases in tourism accommodation prices continuing into 2023. 

"When I was here in April, I expressed our view that housing displaced Ukrainian citizens and asylum seekers in short-term tourist accommodation is not good for them and is not good for tourism.

"Tourism is a complex symbiotic ecosystem where lots of different types of businesses rely on each other. Accommodation stock taken out of the market brings with it a multiplicity of challenges, not just the rising cost of accommodation. 

"When we consider that for every euro a visitor spends on accommodation, they will spend €2.50 in other parts of the local economy – in local cafes, shops, galleries, restaurants, visitor attractions – when accommodation is removed from a locality, the survival of many other businesses in this locality is put at significant risk.

"Fáilte Ireland and many other public and private sector stakeholders have worked hard to create an attractive tourism product throughout the country to provide employment and build better places to visit and live. The removal of hotel stock from these areas threatens to undo much of this work.

"Whilst a reduction in the available supply creates the conditions for price rises, prices only rise because individual businesses make the decisions to put their prices up, and all businesses need to be cognisant of the long-term impact of excessive pricing.

"In conclusion, I would like to reiterate that the long-term wellbeing of our tourism economy and the communities that rely on it desperately need as much of the tourism accommodation stock as possible returned to tourism use for the 2023 tourism season."