The Irish hotel sector has criticised a decision by Dublin City Council to significantly increase development charges on new hotel projects, warning that the move could deter investment and worsen accommodation shortages.
Under changes approved by the council as part of its revised development contribution scheme, hotels, tourist hostels and aparthotels will be subject to a levy set at twice the standard commercial rate from 1 July.
The increase means developers will face a charge of €244 per square metre for new projects. For a large-scale development of 20,000 square metres, the contribution payable is expected to rise from approximately €2.5 million to €5 million.
The Irish Hotels Federation (IHF) said the decision comes at a time when the industry is already grappling with rising construction costs and challenges in delivering new accommodation capacity.
IHF Chief Executive Paul Gallagher said the higher levy risks undermining efforts to expand Ireland’s tourism infrastructure.
“Doubling the development contribution sends the wrong signal at the worst possible time,” he said.
Mr Gallagher argued that many proposed hotel developments are already struggling to progress due to escalating costs.
“The cost of delivering new hotel capacity is already prohibitive, and projects right across the country are stalled as a result,” he said.
The proposal to increase charges on hotel developments was first raised by Green Party councillors during discussions on the council’s development contribution scheme for the period 2026 to 2029.
Green Party councillor Michael Pidgeon previously said the measure could help redirect investment towards residential construction by making hotel developments less financially attractive.
However, the hotel industry maintains that Ireland faces a growing shortage of visitor accommodation. Analysis commissioned by the tourism sector earlier this year estimated a national deficit of between 10,000 and 15,000 hotel rooms by 2031.
The federation warned that Dublin, as the primary gateway for international visitors, plays a critical role in supporting tourism throughout the country. It said restrictions on hotel investment in the capital could have wider consequences for the national tourism economy.
“If we are serious about meeting our national tourism targets, it makes no sense to double a major upfront charge on the very accommodation those targets depend on,” Mr Gallagher said.
The revised levy structure is scheduled to come into effect from the beginning of July.
