Tourism sector risks pricing itself out of the market

It’s been a torrid two years for Ireland’s critical tourism industry. Strange then to see it currently working to make its own future even harder.

Ireland is not a budget destination for travellers; it hasn’t been that for many years. But travellers have options and if you simply price the product out of the market, they will look elsewhere.

Conor Pope went hotel hunting recently for this paper. Looking at prices for the next week’s bank holiday weekend, he was quoted more than €1,300 for a three-day stay for two at Jurys Inn Christchurch. That’s more than €400 a night for a room in a hotel that might have stepped up from its modest budget roots but is still far from an “experience”. It’s a functional city hotel.

To be fair to Jurys Inn, Conor made the point that it was far from an outlier in terms of pricing.

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The same is true of car hire. Wherever you look, prices have surged obscenely.

There are a number of factors at play but they are common to the tourism sector here and elsewhere. Freed from two years of on-and-off-again lockdowns, people are looking for a break – and they have money to pay for it, having had little to spend it on during the pandemic. So there’s a surge of demand.

But supply is limited, with the need to house both Ukrainian refugees and our own homeless families effectively taking significant numbers of hotel rooms out of the Irish market.

Costs for the sector have also risen in all sorts of ways – insurance, energy costs, food costs, staff costs, where they can find the staff at all – but those increases are far short of the scale of increase in prices.

Car hire has its own specific issues, having sold off their fleets to survive the harsh times only to find supply-chain crunches mean they cannot scale up again quickly enough to meet increased demand.

And yes, tourism businesses need to replenish their profits. But just because demand says you can multiply your charges and make supernormal profit, that doesn’t mean you have to, or even that it is a good idea.

Tourists put off the idea of coming to Ireland this year on cost grounds may well look elsewhere in future years. And if people cannot afford to hire cars, it cuts chunks of the State’s tourism sector outside Dublin off from the customers they so desperately need.

Tourism needs to take a longer-term view; the sector can’t recover all its Covid losses in one year.