Irish Hotels Federation rejects accusations of profiteering and warns against ‘media hype’

The Irish Hotels Federation (IHF) has defended the sector against criticism over escalating room rates. It also said it would be “really disappointing” if “media hype” about Dublin room rates were to lead to a decision by the Government to increase the special 9 per cent VAT rate for the tourism industry.

In advance of an appearance before an Oireachtas committee tomorrow to face politicians over claims of profiteering in the sector, the IHF says its research suggests that 3,960 rooms, or 17.6 per cent, of the total inventory of close to 22,500 hotel rooms in the capital are currently not available for sale to the public.

It said 15.2 per cent had been booked up by the State to house refugees and homeless people.

A further 2.4 per cent, or about 550 rooms, were currently out of use either because they are being used to house staff, there are not enough staff to allow them to open or they are being refurbished, the IHF said. This leaves barely 18,500 available hotel rooms in Dublin at a time when there is a massive pent up demand for travel, as well as a glut of sporting and entertainment events taking place around the city.

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Tim Fenn, IHF’s chief executive, suggested recent reports of even modest hotel rooms in Dublin charging €300 or €400 per night over coming weeks were misleading. He said that up to 80 per cent of rooms for June were pre-booked at lower rates, and only the last few available rooms were being sold at the higher rates that have figured in media coverage.

Mr Fenn suggested that only up to 6 per cent of room capacity each month is sold at short notice for people requiring accommodation following events such as concerts or sporting fixtures, and that these are the rooms attracting the highest prices.

He said the latest industry data from research agency STR suggests that Dublin hotel rooms in April cost an average of €154 per night, a 16.5 per cent increase over 2019, the last full year before the pandemic. He said early indications are that the average rate in May was about €177, a rise of about 15 per cent.

The hotel sector has been at the centre of public debate in recent weeks after it was reported that Eugene Murphy, a Roscommon-based senator, said he had chosen to sleep in his car on occasion in Dublin due to the lack of affordable hotel rooms. Kerry’s GAA county board also complained publicly about the soaring cost of accommodation in the capital around Croke Park fixtures.

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“There is a lot of dissatisfaction in political circles,” said Mr Fenn. “But nobody predicted in January or February how quickly things were going to recover. The challenge now is around supply.”

He said that 3,000 new hotel rooms that were delayed by the pandemic should come on stream before the end of 2024, along with a further 2,000 new rooms. He said the extra supply should help to alleviate some of the pressure.

Mr Fenn warned, however, that for some upcoming nights there would be “zero” hotel accommodation available in Dublin. Industry sources speculated that the weekend of the upcoming Eagles gig on June 24th would be a major pinch point for hotels in the capital.

The IHF chief executive said the 9 per cent VAT rate, which is due to rise to 13.5 per cent next spring, should be kept as it is “the right rate” to help the sector compete internationally.

He said he hoped that the furore over rates did not lead to a decision by the Government to raise the rate.

“We would hate to think that someone might take a short-term decision based around media hype over the last available room rates. It would be really disappointing if that was to be a reason [that the VAT rate changed],” he said.