An estimated 11,500 additional tourism beds will be required here in the next decade if Ireland is to meet projected demand, a new report on the sector has concluded.
The report was carried out by economist Jim Power on behalf of the Irish Tourism Industry Confederation.
It partly bases its projections on estimates for growth in overseas tourism numbers, which is expected to reach 13.2 million annual visitors by 2032.
That is up from a previous high of 9.7 million international visitors in 2019 when there was an estimated 60,000 tourism beds in the country.
Using 2019 as a baseline, and accounting for projected increased visitor numbers, an estimated 5,500 bedrooms would be required in the next decade.
However, when a natural attrition rate of 1 to 2% of rooms per year is applied, it suggests a loss of 6,000 tourism beds in the next ten years.
The report concludes that it is “reasonable to assume” that 11,500 additional beds would be required to meet demand in the coming decade.
High build costs, the price of land and the high cost of capital are acting as a drag on hotel building at the moment with the bulk of the activity confined to the cities of Dublin and Cork.
A recent report from consultants Cushman and Wakefield estimated that 3,600 hotel rooms are forecast to be delivered to the market in the coming years but that the vast majority – 84% – are destined for the Dublin market.
The paper pinpoints two particular areas of challenge for the tourism sector.
It says the Government’s ‘over-reliance’ on tourism accommodation to house refugees and asylum seekers applicates has exacerbated the tourism accommodation shortfall.
The report also identifies the Midlands as the region with the most acute deficit with only 5% of national tourist bedrooms.
It says plans to develop the region as a tourism destination with the EU Just Transition Fund would be seriously undermined in the absence of additional accommodation provision.
€68 million in funding is being allocated to tourism development in the Midlands in the coming years to assist in the shift away from peat extraction as a major industry.
“The Midlands will remain a transit zone rather than a touring zone to the severe detriment of local economies throughout the region,” Elaina Fitzgerald-Kane, Chair of ITIC warned in the absence of additional accommodation provision in the region.
The report suggests a range of policy measures including tax incentives, capital allowances and public-private partnerships to stimulate developments throughout the country.
“The bottom line is if we want to create accommodation to facilite investment, Government is going to have to become more proactive in incetivising it,” Jim Power told Morning Ireland.
“This is unlikely to happen of its own volition. The methodology for delivering hotels is not great because the economics are not great,” he explained.
Eoghan O’Mara Walsh, CEO of the Irish Tourism Industry Confederation said a there was a plethora of issues conspiring against the delivery of stock which was exacerbating the problem.
“Ireland needs more hotels to both moderate price and meet projected demand. The price of sites, allied to construction inflation, make new builds cost prohibitive apart from selected urban hotspots,” he said.
“Government will have to stimulate the market otherwise Ireland will miss out on its tourism potential,” he added.
CSO figures last month confirmed tourism as the largest indigenous industry and biggest regional employer accounting for 4.4% of GDP and 13% of the national workforce.
Today’s report is being issued in conjunction with the launch of the ITIC conference which is scheduled to take place on September 18 in Athlone.