State using 8,500 hotel rooms to house refugees

Almost one in seven hotel rooms in the State is currently booked out by the Government to house refugees, exacerbating a supply crisis in the sector that has caused room rates to increase significantly in recent months, leading to significant political and public anger.

The Department of Children, which is responsible for housing all refugees, has confirmed to The Irish Times that the latest number of hotel rooms being used to house Ukrainian refugees is about 5,100, while a further 3,422 rooms are being used to house asylum seekers from other countries who are in the direct provision system.

This means that 8,522 out of the 61,000 hotel rooms in the State, or 14 per cent, are currently off the market for tourists, business visitors and domestic staycationers. The number of hotel rooms that have been taken off the private market is almost three times as many as the number of new rooms expected to be built over the next two years.

Representatives of the hotel and tourism industries, as well as State tourism officials, are due to appear in front of an Oireachtas committee on Wednesday, where the industry is expected to come under significant pressure over skyrocketing room rates this summer, especially in Dublin and at tourism hotspots such as Killarney. Typical nightly room rates in Dublin top €400 on most weekends.

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Some politicians such as Fianna Fáil’s Timmy Dooley, who is not a member of the committee, have accused the hotel industry of “price gouging” as the demand for travel bounces back after Covid. The Tánaiste Leo Varadkar, recently warned that escalating room rates could cost the tourism industry any further extensions to its special 9 per cent VAT rate, which used to be 13.5 per cent.

Many hoteliers have rejected the “price gouging” tag and have pointed towards the capacity that has been taken off the market for refugees, saying it has “distorted” room rates. The Department of Children’s International Protection Accommodation Service (Ipas) pays set rates for all of the capacity that has been taken out of circulation.

One hotelier who contacted The Irish Times, Charles O’Callaghan, the son of Noel O’Callaghan who built up the family’s eponymous hotel group that includes four Dublin properties, said he “can see how the consumer feels rates for some properties are too high”. He said there was “a lot more to it” than temporary supply reductions due to refugees, and he also noted inflation in the supply chain, hotels that have not reopened since the pandemic, unused capacity due to staffing shortages, and supply chain bottlenecks such as scarce supplies of linen.

Ipas appears to have recently extended its block-booking deals with many hotels as the State comes under huge pressure to house growing numbers of refugees. For example, earlier this year it block booked until this summer the brand new €100 million, 393-bedroom Travelodge Plus hotel in Dublin city centre. However, availability on booking sites suggests the hotel is now block booked until at least the end of this year.

At the Oireachtas committee meeting on Wednesday the Irish Tourism Industry Confederation lobby group is expected to say that 2022 “cannot be seen as a normal year”, and that “escalating cost pressures and a lack of supply” have helped to create pressure in the industry.

The confederation will say that the latest STR research data suggests room rates in April were up only 16 per cent since before the pandemic. The latest data from the Central Statistics Office suggests hotel rates in May were up 21 per cent year-on-year. Anecdotally room rates are increasing at a far faster pace this summer in the most in-demand areas.