Kenny putting on Ritz for tax relief
The RTE broadcaster is among the high-fliers who invested in the 5-star hotel in Wicklow while smaller operators are struggling to survive
Published 04/07/2010 | 05:00
RTE BROADCASTER Pat Kenny, music promoter Denis Desmond and developers Sean Mulryan and Sean Dunne were among a group of investors in a multi-million euro tax break scheme that involved Anglo Irish Bank, Treasury Holdings and the five-star Ritz Carlton Powerscourt Hotel, in Co Wicklow, in 2007 and 2008, the Sunday Independent can exclusively reveal.
News that two potentially Nama-bound developers and other wealthy individuals stood to benefit from a hotel tax-break scheme emerges while smaller hotel operators and bed and breakfast owners throughout the country struggle just to stay afloat.
Many are facing a double-whammy of falling room prices -- due partly to banks keeping hotels open until they can realise tax breaks -- and plummeting occupancy rates due to a slump in overseas visitors.
The new information also comes to light in the wake of a report last year in which economist Peter Bacon blamed tax breaks for fuelling the oversupply of hotel rooms -- some of the consequences of which were recently discussed on RTE's The Frontline programme which Mr Kenny presents.
Registry of Deeds documents indicate that the broadcaster -- who last year took a 10 per cent paycut in his €850,000-a-year salary -- invested in one hotel suite.
Suites in the 200-room Ritz Carlton hotel, which Treasury Holdings developed at a reported cost of €120m, and which opened in October 2007, are believed to have cost between €600,000 and €2m.
There are 124 "sumptuous Dublin suites" in the hotel, "all opulently furnished, with an average size of 700 sq ft [which are] some of the largest hotel rooms in Ireland," according to the hotel's website.
Also among the group of 158 investors was Denis Desmond, who invested in three suites. Sean Dunne and several other members of his family are also thought to have invested in more than one. The prices paid were not specified in the documents, which identify Anglo Irish Bank as the investors' agent.
Developers David Agar and Jarlaith Sweeney, and Adrian Crawford, a partner at KPMG, were also named as investors in the scheme, along with a number of less well-known business people. Many of the other investors were professionals such as doctors, dentists and estate agents.
Once the investors had purchased the rooms, possibly financed partly with bank loans, the tax-break scheme then runs for seven years, which is the tax life of the hotel. At the end of the seven years, what typically happens is that the investors would claim their capital allowances for tax purposes on their initial investment.
A source with knowledge of the scheme said loans made to Treasury Holdings in relation to the hotel are among those that will be transferred to Nama and that the loan is being serviced.
Although any tax-break benefit to the investors is not believed to be at risk, it is not clear what the effect on any of the parties involved in the scheme would be if the value of a hotel suite were to change.
"I don't generally comment on anything like this, but as I don't have an RTE pension, this was part of my own efforts to provide for my old age. This is a tourist asset to Wicklow, with two golf courses and what have you, so it should be a very successful venture, but to be quite honest I've no idea how it's doing," Mr Kenny said.
"This is a very high-quality hotel in the Garden of Ireland, so to my mind you could say you're very happy to be associated with it. Pretty much everything property-related in Ireland is a dud at the moment, so there's no telling what things will be like in the years ahead," he added.