High building costs and planning delays a ‘serious threat’ to tourism

DCM Editorial Summary: This story has been independently rewritten and summarised for DCM readers to highlight key developments relevant to the region. Original reporting by Irish Times, click this post to read the original article.

High building costs and planning delays represent a “serious threat” to the Irish tourism sector, the Irish Hotels Federation (IHF) has warned.

The combination of rising costs and uncertainty from the planning system is, the hotels’ lobby group said, impeding the delivery of new hotel beds at the risk of “jeopardising the industry’s future growth”.

IHF chief executive Paul Gallagher said the “long-term success of Irish tourism depends on our ability to offer high-quality, approved accommodation across every county”, while speaking at the federation’s conference.

He warned that Irish hotel operators, despite having growth ambitions, are facing “significant hurdles that make it difficult to bring new projects to fruition”.

“Between the rising cost of construction and a planning system that often lacks the necessary speed and certainty, the path to expanding our room capacity has become increasingly complex,” he said.

Gallagher stressed the need to address “structural bottlenecks” in the planning and construction sectors to “unlock the potential” of regional areas while also retaining Ireland’s competitiveness.

Could Simon Harris’s savings scheme for the ‘middle classes’ prove to be a sound investment?

Listen | 38:27

A survey of Irish hoteliers by the IHF found that construction viability was cited as a barrier to capital investment into building new rooms by nearly nine in 10 operators. These respondents cited the gap between per-room build costs and return on investment as a major or significant barrier.

Delays and uncertainty in the planning approval process was cited as a major hurdle by 31 per cent of hotel businesses, and as a significant hurdle by a further 41 per cent.

Compared with these two barriers, only a slight majority (54 per cent) felt accessing viable financing as a barrier to investment. Utility infrastructure was raised as a significant or major barrier by slightly more than a third of hoteliers.

In light of the market research, the IHF is calling on the Government to streamline the planning process and to give more predictability for tourism accommodation applications.

Despite these concerns, 75 per cent of hoteliers plan to further increase investment over the next 12 months, according to recent industry research by IHF.

A Fáilte Ireland report said there was about 36,250 tourist accommodation beds with planning permission at the end of March 2025. This amounted for approximately 10 per cent of all existing tourism bed spaces in the country, about 353,250 beds.

A further 11,550 bed spaces were under construction. The report noted, however, that Dublin city accounted for 90 per cent of all hotels under construction.