This report by the Irish Tourism Industry Confederation (ITIC) aims to both outline the unintended consequences of an over-dependence by Government on tourism accommodation stock, and to set out a number of policy recommendations that should be taken to ameliorate the situation. ITIC fully supports the Government’s humanitarian reaction to the Ukrainian crisis and is ready to assist in devising a balanced strategy. However Ireland’s tourism and hospitality industry cannot be asked to take the primary burden of accommodating Ukrainian refugees and asylum seekers on its own and a more proportionate and creative approach is required from Government.
The extensive, and potentially increasing, reliance on tourism accommodation to provide housing for refugees and asylum seekers is placing a limitation on the country’s carrying capacity to cater for domestic and overseas visitors and is putting Ireland’s tourism recovery at risk. There is an urgent need for a credible pathway – short and medium term – to optimise the contribution that tourism providers can make to Ireland’s response to the current refugee crisis, while minimising the potential constraint and longer term damage to Ireland’s tourism economy.
The Russian invasion of Ukraine on 24 February 2022 has resulted in the largest displacement of Europeans since World War II, with 5 million currently living in Europe under the EU’s Temporary Protection Directive. To-date Ireland has welcomed 57,000 Ukrainians, more per capita than many other member states, this despite a very limited temporary accommodation infrastructure.
80% of arrivals are reliant on the State for accommodation. Currently 22% of the country’s tourist accommodation capacity, including 15% of hotel rooms, is contracted to provide shelter for those fleeing Ukraine, plus around 5,000 asylum seekers from other countries. At present an estimated 34,000 Ukrainian citizens are living in tourist premises. As refugees continue to arrive, currently at a rate of upwards of 1,000 per week, the State is becoming even more reliant on tourist accommodation as temporary shelter in the absence of other options. While Ireland is not alone in struggling to meet the accommodation needs of refugees, it is an outlier in its over dependence on tourist accommodation to provide temporary shelter.
The outlook is for protracted hostilities in Ukraine with the likelihood in the short term of a new wave of refugees as many of the estimated 7 million displaced persons internally flee war over the harsh winter months. Ireland faces an immediate challenge of providing temporary accommodation for those arriving seeking shelter, together with the need for a transition from temporary to medium term or longer term accommodation and supports. The Government is projecting a short fall in accommodation of 15,000 beds by the end of the year.
Government has announced a number of measures to address the growing crisis but it is difficult to foresee the delivery of accommodation supply at a scale and pace to significantly reduce the over dependence on tourist accommodation in time for the start of the 2023 season.
The immediate impact of the current situation on tourism is a marked reduction in capacity, higher prices for available accommodation, and a devastating impact on the visitor economy of many popular tourism areas in the country where a sizeable share of tourist accommodation has already pivoted to housing refugees. Such areas include west Clare, County Donegal, Killarney and west Waterford. Downstream businesses in hospitality, retail and other tourism services are suffering from the absence of tourists and consequential job losses.
The outlook for tourism demand in 2023 is unpredictable as the desire to travel remains strong, but rising cost of living and interest rates could dent the volume and value of international and domestic trips. Later booking patterns mean that Ireland’s ability to meet demand will be severely challenged should a signifiant share of its guest accommodation be withdrawn from the market.
The impact on demand versus supply will be felt most keenly at times of peak demand and in the more popular destinations.
ITIC’s projections show that should the over-reliance on tourist accommodation continue into 2023, tourism supply side could be reduced by approximately 30% should the number of Ukrainian refugees reach above 90,000. This would have serious negative impacts on tourist visits, with the loss of up to €1 billion in earnings, the loss of hundreds of jobs in the broader hospitality and supply sectors, threaten the sustainability of many businesses, and seriously damage Ireland’s competitiveness. A lack of available accommodation may also affect carriers who will suffer from frustrated tourist demand in key source markets. The longer term impacts could delay Irish tourism’s recovery by several years, as well as causing structural shifts within the sector.
Research shows that for every €1 a tourist spends on accommodation, €2.50 is spent on other services. In view of the seriousness and urgency of addressing the issue, ITIC is making the following recommendations:
- A Department of Taoiseach-led whole of government approach
- A published 2 year humanitarian plan as to how displaced persons are to be accommodated
- A 12%-15% allocation: in ITIC’s view a proportionate and fair allocation from the tourism industry is between 12% and 15% of available stock to be given over to refugees and asylum seekers.
- A Business Continuity Fund for tourism businesses negatively affected by the impact of Government contracts
- Expedited Local Authority strategies to deal with the crisis
- Focus on fast tracking alternative accommodation solutions
- Encourage integration into the labour force by minimising barriers to entry.
- Quicker transition from Direct Provision
- Extend tourism VAT rate of 9% to 2025