Only 45 of 600 Hotels Have Returned to Tourism as State Refugee Contracts Wind Down, Figures Reveal
Department of Justice figures have revealed that only 45 of the more than 600 hotels and guesthouses that had their state contracts for refugee and asylum seeker accommodation terminated since late 2024 have returned to their original use as tourist accommodation — a finding that has raised serious concerns about the long-term impact of the emergency accommodation programme on Ireland's tourism capacity and the competitiveness of the hospitality sector.
Background
The Irish government's decision to use hotels and guesthouses as emergency accommodation for refugees and asylum seekers was a response to the dramatic increase in the number of people seeking international protection in Ireland in the years following the Covid-19 pandemic and the Russian invasion of Ukraine. At the peak of the programme, hundreds of hotels and guesthouses across the country had entered into contracts with the Department of Justice to provide accommodation for those seeking protection, effectively removing a significant portion of Ireland's tourist accommodation stock from the commercial market.
The programme was always intended to be temporary, and the government began winding down the contracts in late 2024 as the number of new arrivals stabilised and as alternative accommodation solutions — including purpose-built reception centres and modular housing — were developed. The termination of over 600 contracts since late 2024 has released approximately 27,000 beds back to the market, a development that was widely expected to provide a significant boost to Ireland's tourism capacity at a time when the sector was struggling to meet demand.
The reality, however, has been more complex. The decision about what to do with a property once a state contract ends rests entirely with the private owner, and many hoteliers have found that the transition back to tourist accommodation is not as straightforward as it might appear. The state contracts provided a guaranteed income stream that was, in many cases, more profitable and less operationally demanding than running a commercial hotel, and some operators have been reluctant to return to the competitive and labour-intensive world of tourist accommodation.
Key Developments
Department of Justice figures published in May 2026 showed that only 45 of the hotels and guesthouses whose state contracts had been terminated had reverted to their original use as tourist accommodation. The remaining properties had either been sold, converted to other uses, remained vacant, or entered into new contracts for other forms of social or emergency accommodation. The figures were described by industry sources as "deeply disappointing" and as evidence that the government's assumption that the termination of state contracts would automatically restore tourism capacity was flawed.
Industry sources have voiced concern that some operators found state contracts more profitable and less demanding than traditional tourism, creating a structural hesitancy to return to the commercial market. Running a hotel for tourists requires significant investment in staff, marketing, maintenance, and customer service — costs that are largely absent when providing accommodation under a state contract. For some operators, particularly those in rural areas where tourist demand is seasonal and uncertain, the guaranteed income of a state contract was simply more attractive than the risks and costs of commercial operation.
The situation has been further complicated by a July 2026 deadline for approximately 1,200 recognised refugees to vacate state-run centres, placing additional pressure on the private rental and emergency accommodation sectors. The combination of reduced tourist accommodation capacity and increased demand for emergency housing has created a difficult situation for both the tourism industry and the social housing sector, with the two competing for the same limited stock of properties.
Why It Matters
The slow return of hotels to the tourism sector has significant implications for Ireland's ability to capitalise on the strong demand for tourist accommodation that has characterised the post-pandemic recovery. Ireland's tourism industry has been performing strongly in recent years, with visitor numbers and revenue both at or near record levels, but the shortage of accommodation — particularly in rural areas and in the mid-range price bracket — has been identified as a constraint on further growth. The failure of the majority of hotels that exited the state contract programme to return to tourist use has exacerbated this shortage.
The figures also raise questions about the design of the state contract programme and the extent to which the government considered the long-term implications for the tourism sector when it entered into contracts with private hoteliers. The assumption that properties would automatically return to tourist use once contracts were terminated appears to have been overly optimistic, and the government may need to consider whether additional incentives or supports are needed to encourage operators to return to the commercial market.
For Fáilte Ireland, the state tourism development agency, the shortage of tourist accommodation is a significant challenge. The agency has been working to develop new accommodation capacity through a range of initiatives, including the development of new hotel and guesthouse projects and the promotion of alternative accommodation options such as glamping and self-catering. However, the scale of the shortfall created by the state contract programme is such that these initiatives are unlikely to fully compensate for the loss of capacity in the short term.
Local Impact
The impact of the reduced tourist accommodation capacity is felt most acutely in the regions that were most heavily affected by the state contract programme. In counties like Roscommon, Leitrim, and Longford — where a significant proportion of the available hotel stock was taken up by state contracts — the return of tourists has been hampered by a shortage of places to stay. Local tourism businesses, including restaurants, attractions, and activity providers, have reported that the shortage of accommodation is limiting the number of visitors they can attract and the revenue they can generate.
In Dublin and the other major cities, the impact has been less severe, as the tourist accommodation market is larger and more diverse. However, even in Dublin, the shortage of mid-range accommodation — the type most likely to have been used for state contracts — has contributed to the upward pressure on hotel prices that has made the city one of the most expensive tourist destinations in Europe. The average nightly rate for a hotel room in Dublin has increased significantly in recent years, and the shortage of supply is a key factor in that increase.
What's Next
The Department of Justice is expected to publish updated figures on the status of former state contract properties in the autumn of 2026, providing a more complete picture of the extent to which the accommodation stock has returned to tourist use. Fáilte Ireland has indicated that it will work with the Department of Tourism to develop a package of supports for hoteliers who wish to return to the commercial market, including access to low-cost finance for refurbishment and marketing support. The government is also expected to review the design of any future emergency accommodation programmes to ensure that the long-term implications for the tourism sector are more carefully considered.
