Lack of accommodation threatens tourism sector growth

North America expected to expand on back of increased transatlantic routes

The Dragon makes its way through the streets of Galway as part of Galway International Arts Festival in July. Picture: Andrew Downes, xposure.

The tourism industry earned €5.3bn from overseas visitors in 2023 with the potential to expand the industry by 5% next year.

According to the Irish Tourism Industry Confederation's (ITIC) review and outlook report, the sector remains robust despite the impact of inflation and international events. The report estimates that 254,000 people are working in the sector today making it the country’s largest indigenous industry and biggest regional employer. Looking to next year, ITIC forecasts that Irish tourism can achieve 5% revenue growth in real terms in 2024 with the North American market offering the best prospects.

However, the ITIC said constraints on the level of accommodation are acting as a handbrake on growth with 20% of hotel and guesthouse beds contracted to the Government for refugees and asylum seekers. They also said new short-term rental legislation is likely to impact self-catering properties. 

CEO of ITIC, Eoghan O’Mara Walsh, said that businesses are concerned with rising costs as a result of Government legislation. “The labour costs alone being imposed on businesses across the economy amount to about €4bn annually – this poses a significant burden for SMEs with tight profit margins and some of these costs should be offset by Government or else Irish competitiveness will be further eroded."

O’Mara Walsh reiterated Irish tourism’s commitment to sustainability and highlighted the significant efforts that are being made including all Shannon boat cruisers operating off hydro-treated vegetable oil next year rather than diesel.

In its outlook for 2024, the ITIC said expectations were positive for growth in transatlantic travel as airlines added more routes as US consumer confidence levels rebounded. Consumer confidence is also growing in key European countries.

However, the ITIC said the business from the British market is likely to continue to prove challenging to recover from the decline in recent years in the leisure and business sectors.

Elaina Fitzgerald Kane, Chair of ITIC also pointed to the conflict in the Middle East and the war in Ukraine as events that could impact on consumer confidence.