Oversupply worst in Sligo and Limerick

HOTEL ROOMS:LIMERICK AND Sligo are among the places where the level of overcapacity in the hotel sector is likely to be greatest, according to the Irish Hotels Federation president Paul Gallagher.

The IHF and Fáilte Ireland are engaged in a survey to find out where the number of surplus hotel rooms in the sector is greatest.

The research is being carried out as part of a review of the tourism sector by Fáilte Ireland and is likely to be published in the coming weeks.

It will match the number of hotel rooms with Tourism Ireland’s projections of the number of visitors expected to visit different parts of Ireland over the next decade.

A report carried out by economist Peter Bacon last year estimated that there was an oversupply of between 12,000 and 15,000 beds in the sector as a result of the tax incentive driven hotel expansion during the Celtic Tiger years.

To date, 34 hotels which were built in that period have been taken over by the National Asset Management Agency (Nama).

Mr Gallagher said Limerick and Sligo have twice the capacity that the market can support and Tralee and Killarney also have significant oversupply, as does the outer ring of Dublin which includes places like Blanchardstown, Liffey Valley, Malahide and around the airport where a lot of the new stock has been placed.

Mr Gallagher stressed that the issue of oversupply could not be dealt with until the areas worst affected are identified.

“To say we have 12,000 rooms too many is only a start. The question is: where the hot spots are. It’s only when we can get a more detailed picture that we can deal with it,” he said.

Minister for Tourism Mary Hanafin said overcapacity will be an issue that the Government along with Nama will have to deal with.

Established hoteliers have bitterly criticised the actions of so-called “zombie hotels” which have been taken over by banks and are undercutting rates for the sector in general.

Mr Gallagher told the Joint Oireachtas Committee on the Environment, Local Government and Heritage earlier this week that hoteliers were facing a “perfect storm” in the tourism sector with a decline in visitor numbers compounding the problems of overcapacity and falling revenues.