Secret memo warns of €1bn hit to tourism spend as refugee crisis heaps pressure on hotel space

Document outlines how businesses will need supports to deal with reduced tourist spending

With thousands of beds off the market to house refugees, less tourists will visit Ireland this summer. Photo: Getty Images — © Universal Images Group via Getty

Senan Molony

The economy will take a €1.1bn hit because of a lack of hotel accommodation this summer, amid the ongoing pressure of housing refugees, a secret Government memo warns.

The document presented to ministers in recent days warns that the level of refugee and asylum-seeker occupancy of hotels will have a serious impact on tourism spending in the coming months.

It predicts the economy will lose out on an estimated €1.1bn, with reduced spending from tourists and other factors.

The document also says that attractions and activities here, that depend on tourist spending, will need financial supports as a result.

Full details of the cost were spelled out in the ‘Discussion Paper on Displaced Tourism Accommodation’.

The document, approved by Fáilte Ireland, states that for every €1 spent on accommodation, every tourist visitor to Ireland spends another €2.50 in the local economy.

It calculated the displacement financial loss through lack of hotel space, amid the need to house Ukrainian refugees and international protection applicants.

The paper argued that there needs to be “mitigation measures” put in place for businesses that depend on tourists – such as boating, bike hire and cafes.

The breakdown of the €1.1bn that will ultimately not be spent by tourists this year was listed as:

:: €581m in food and beverages

:: €94m in activities and attractions, such as caves and kayaking

:: €207m in all areas of transport

:: €198m in retail

:: €20 million labelled ‘other’.

The total comes to €1.1bn.

The Taoiseach, Leo Varadkar, is among those who were presented with the startling figures at a meeting of the Cabinet subcommittee on Ukraine last Thursday.

Ministers discussed the implications for profitability and the maintenance of jobs, as well as whether “mitigation measures” were feasible in the context of the Budget in the third quarter of the year.

Budget 2024 is scheduled to be announced in October 10.

The Government has already intervened to assist businesses with electricity costs, and previously directly subvented employers during the Covid pandemic.

The news of the hit to tourism comes as it emerges that only a small proportion of Government-acquired hotel beds will revert to tourism at the end of this month.

The number of refugees being accommodated in hotels and guesthouses is currently 37,500. It is likely to remain at this level.

Only 2,500 hotel beds have come back onto the tourism market since the start of the year, and fewer than 500 will be further available by the end of June.

Few hotels, B&Bs and hostels are coming “off-contract” to avail of the seasonal boom. This is because they are already fully booked and paid for by minister Roderic O’Gorman’s integration department.

Independent TD Carol Nolan said the “response to an international crisis has created a national crisis for tourism businesses”.

The Rural Independent Group which she belongs to has regularly warned about a tourism-spend disaster this summer as a result of the accommodation crisis.

There have also been warnings at Dáil committees, highlighted by Bord Fáilte, that lack of availability is driving high prices for hotels.

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