Hotel prices, not enough hire cars, staff shortages – the ‘triple threat’ blocking the full return of tourism
A confidential report has warned of a triple threat to the recovery of the tourism and hospitality industry in Ireland.
Holidaymakers face a hotel price shock, while there is also a lack of rental cars and major problems with staff and skills shortages.
The industry report seen by the Irish Independent raises fears that consumers may be hit in the pocket due to inflationary pressures.
It also outlines the shortage of hotel rooms and a reduced car rental fleet.
The Tourism Advisory Group report says some tour operators are “scrambling” to find beds, but pricing is proving a major challenge, particularly around weekends. It is understood that the advisory group was set up by Fáilte Ireland and includes the main representative groups from the sector.
It warns key staff are being lost to other countries due to “extended” work permit processing times that are causing “huge frustration” to would-be employers.
“Operational costs continue to increase at an unprecedented level and businesses are struggling with the balance to maintain competitiveness while ensuring financial stability,” says the group’s report, the Covid-19 Impact Bulletin.
It comes as some four-star hotels in Dublin are quoting prices of nearly €400 for a one-night stay.
The bulletin says that, together with the humanitarian response, the most obvious impact of the Ukrainian crisis on Ireland to date has been war-induced increases in commodity prices.
“The former is putting pressure on tourism’s accommodation capacity, while the latter has left inflation at a multi-decade high of circa 7pc,” it says.
“A specific challenge being faced surrounds the displacement of business arising from three-star properties in particular committing to three to six-month contracts to support emergency accommodation needs for Ukrainian citizens.
“Tour operators are scrambling to find alternative bed blocks, but pricing is proving a major challenge, specifically around weekends.”
The report says Fáilte Ireland is working with Government bodies to source appropriate accommodation for arrivals from Ukraine, while monitoring the effects on tourism.
Elsewhere, it highlights a lack of rental cars, which is creating challenges for golf operators.
“Shortfalls” in the rental car fleet are leading to cancellations of bookings and inflationary pressures.
“There are also knock-on impacts on the rates being quoted for next year,” it says.
Staffing shortages “continue to negatively impact businesses”.
A Fáilte Ireland report earlier this year estimated there were 40,000 vacancies across the sector.
Jenny De Saulles, the director of sector development at Fáilte Ireland, said staffing and skills shortages being experienced across the tourism and hospitality sector were unprecedented.
“This challenge is not unique to tourism or to Ireland – there are many sectors of the Irish economy facing this same challenge and, indeed, this is also the case for tourism around the world,” she said.
“The labour market has never been so competitive, and there’s no doubt that the loss of skilled workers and the difficulty in recruiting and retaining staff is one of the greatest barriers to the tourism sec-
tor’s recovery from the pandemic.
“While this is a cross-economy issue, the immediacy of the challenge is underlined for our industry as it faces into its most important time of the year, and often the only time that is feasible for smaller businesses to operate – the summer season.”
Ms De Saulles said there were now tens of thousands of vacancies from front-of-house to middle management.
“Tourism businesses across the country are telling us they cannot recruit the people and skills they need to operate at full capacity during the summer months,” she added.
“This is despite many offering increased salaries, progression opportunities and flexible work patterns.”
There is no “silver bullet”, and Fáilte Ireland is working on initiatives including a recruitment awareness campaign targeting retirees, parents and younger people “to showcase how working in the industry can suit their lifestyles”.
The report says organisations in the sector are making a case for chefs to be put on a crucial skills list, which would result in the cutting of work permit processing times to six weeks.
When asked about waiting times, a Department of Enterprise spokesperson admitted there was a backlog – applications had risen to 27,666 last December, a 69pc increase on the same period in 2020.
Processing times for critical skills and intra-corporate transfer employment permits have fallen to six weeks, but general employment permit waiting times are close to 22 weeks.
The spokesperson said the department was conscious of the need to prioritise permits for seasonal roles.
It expects waiting times for all sectors to significantly fall in the coming weeks.
Meanwhile, the report says there is anxiety among travel agents about a US requirement for negative antigen tests before returning home.
It also notes that the wage subsidy scheme is being phased out.
However, it acknowledged American visitors are returning, with bookings for May and June good, and rescheduled weddings also providing strong business. Easter was a good trading weekend, and Dublin got a boost when major gigs returned, with Ed Sheeran fans “driving a peak in demand”.
The report notes that while high inflation squeezes household budgets, savings are buoyant.
The report concludes that the Ukraine war has slowed rather than derailed the recovery for the tourism sector following the pandemic.
Eoghan O’Mara Walsh, the CEO of the Irish Tourism Industry Confederation, said Irish tourism must maintain its value.
“Costs are rising at an alarming rate for hotels and all tourism businesses, many of which are SMEs and operate off tight margins,” he said.
“Only so many of these cost rises can be borne by a business, and some will have to be passed on to the consumer.
“It is vital that business cost rises are minimised where possible”.