The Government has stored up immeasurable pain for itself and the tourism industry with the extent of the State’s reliance on the accommodation sector – hotels and B&Bs – to house refugees from Ukraine and elsewhere. More than 40,000 tourism bed spaces are now in use to house blameless people who had come to Ireland seeking refuge from war, persecution and other forms of misery. Yet it is hard to see how this can be sustained without causing significant economic damage in 2023.
The numbers suggest that more than one in five of all tourism bed spaces are currently off the commercial market because they are being used by the State for refugees. Outside of Dublin, it is closer to one in four. Removing such a chunk of the industry’s accommodation capacity will badly distort the market over the winter, leading to inflated rates and frequent availability pinch points.
Ancillary businesses that depend on tourists, such as local attractions and restaurants, could come under serious pressure in some regional locations, as they will have no State refugee payments to fall back on
That is little more than an inconvenience, however. The real pressure will come next March when the international travel season kicks off again and many hoteliers and B&B owners will seek to end their arrangements with the State and return their bedroom stock to the commercial market. If they don’t, they will trash their own revenues for the year due to the tourism business foregone.
Meanwhile, ancillary businesses that depend on tourists, such as local attractions and restaurants, could come under serious pressure in some regional locations, as they will have no State refugee payments to fall back on. This will become especially true in the myriad tourist towns along the Atlantic seaboard where many refugees are spending the winter. It is sure to test local sympathy for refugees from Ukraine and elsewhere.
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Government and industry must face up to the inevitability that some hoteliers will soon choose to start asking refugees to leave their accommodation. But to go where?
This week, we had a taster of what lies ahead. About 200 refugees, including 83 children, staying at the Ibis hotel in Clondalkin have been told they must move within two weeks, according to local Sinn Féin TD Eoin Ó Broin. The uncertainty must be awful for them. With about 250 hotel businesses currently signed up to temporary contracts to rent rooms to the State for refugees, there could be plenty of stories like the Ibis Clondalkin’s each week in the spring.
There is no evidence of any State plan for what lies ahead. It seems like the epitome of the cliched vision of a slow-moving train crash. It may be that the Government hasn’t prepared a clear plan because it may not have the resources or ability to do so. The unavoidable fact of the acute shortage of all types of accommodation in the State makes this a tough nut to crack.
The tourism industry’s lobbyists have laid down a marker. The Irish Tourism Industry Confederation (ITIC) this week prepared a report that calls for the State to reduce by about a third its current reliance on hotel and B&B bedrooms for refugees. This suggests that even in the unlikely event that no more refugees arrive needing to be put in tourism accommodation, the State would still need to source alternative beds for well over 10,000 people over the next four months.
Impossible
Quite simply, that is impossible. The Government has nowhere else to put people arriving from Ukraine and other countries. Modular homes cannot be built quickly enough to cope with the potential outflow from hotels, and the notion that factories and office buildings can be quickly “repurposed” into suitable refugee accommodation might play well on local radio, but is fanciful.
Winters in Ukraine are cold. Many homes are all but destroyed. Any escalation of the conflict, which seems possible at any moment, would spark a renewed flow of refugees to the West
Not only is there little chance of the number of tourism beds allocated to refugees declining below 30,000, as the industry wants, but it seems more likely that the demand will actually increase over winter. Winters in Ukraine are cold. Many homes are all but destroyed. Any escalation of the conflict, which seems possible at any moment, would spark a renewed flow of refugees to the West.
All hell will break loose next spring when the reality of this quandary lands fully with both the industry and the Government. ITIC claims that if refugee numbers rise by 30 per cent, which isn’t beyond the bounds of possibility, up to €1 billion could be lost to the tourism industry in displaced revenues. That is a very round number, and a handy one to lobby with. But even if it is not fully accurate, it is true that significant damage will be done.
Tourists towns in the West and southwest such as Killarney, Westport, Bantry, Doolin, Ballyvaughan and Clifden are among those most exposed to what lies ahead. These towns are among the most visited by US tourists, who spend more in ancillary businesses than visitors from any other market. If US tourists cannot make hotel reservations in these towns, they won’t come to Ireland at all.
Tender documents from the Department of Children and Integration, which is responsible for housing refugees, suggest the State pays mid-range hotels €135 per room per night for full board in Dublin, on a single-occupancy basis. In limited circumstances, it will pay up to €145. Rates outside Dublin are lower. An extra payment of €25 is made for each additional adult or child in the room.
It might be good business for some hoteliers in the winter. But the latest industry data from research firm STR shows revenue per available room in September across Dublin, for example, was €203. It is only a matter of time before more hoteliers jump ship from their temporary refugee contracts.
The tourism industry has been disrupted by the needs of the State for three years. It had to be sacrificed to combat the public health emergency of the pandemic in 2020 and 2021. This year has been a decent one but, now, the reality of the refugee crisis and how it eats up tourism capacity bodes ill for 2023. Throw in the interminable and damaging row over tourism’s 9 per cent VAT rate, and the industry’s welfare has been in the gift of politicians for far too long. It must be let loose.
