Nama hotels 'undercut' viable businesses
Published 05/01/2014 | 02:30
NAMA now has an interest in almost one-in-seven hotels in the country, new figures obtained by the Sunday Independent reveal.
The State's 'bad bank' has confirmed it "holds security" over 108 of Ireland's 835 hotels, sparking criticisms that the agency is distorting the market by keeping a huge number of failed businesses alive.
Nama this weekend rejected claims that it is keeping unviable hotels open.
However, Fianna Fail's jobs spokesman Dara Calleary said Nama-supported hotels are under-cutting independent family run businesses who are not able to slash their room rates in order to compete.
"Nama is helping hotels that got into trouble and is now keeping them going while independent family hotels are threatened. It is a disgrace. They run cut-price offers that other hotels can't match, and they don't care [about] the impact they have. The State is the biggest hotelier in the country and of course it is distorting the market," Mr Calleary told the Sunday Independent.
Driven by property-related tax breaks, the number of hotel rooms ballooned by 33 per cent during the boom years, from around 45,000 in 2004 to 60,000 in 2008.
Now Nama is under fire for keeping many of these unsustainable hotels open. The agency provides lending to hotels it works with, which allows them to meet short-term expenditure.
Figures revealed in a response to a parliamentary question from Mr Calleary show 31 hotels in Dublin are now under Nama's control, with 29 more in Leinster, 29 in Munster, 15 in Connacht and four in Ulster.
Mr Calleary asked Finance Minister Michael Noonan to provide a county-by-county breakdown of the hotels Nama is supporting, but the agency refused to provide the requested information.
And when asked by the Sunday Independent to provide such a breakdown, Nama again refused, saying: "We are not providing a breakdown at county level of hotels linked to the agency's portfolio."
A number of independent hoteliers contacted by the Sunday Independent also criticised Nama for propping up what they described as "unviable" hotels.
However, Nama rejected the criticisms and insisted it does not support hotels that are not viable.
"To do so would not be in the interests of the taxpayer," a Nama spokesman told the Sunday Independent.
Nama added that it has closed 11 hotels and sold a further 10 that it has taken control of since the economic crash.
The 'bad bank' also claimed the Competition Authority has interacted with it on two occasions in respect of its influence on the hotel market and has found the agency has no case to answer.
The sale of the 10 hotels has raised some €160m. Most of those sales have been top-grade Dublin and Cork assets, including the Trinity Capital Hotel in Dublin, which was bought by American billionaire John Malone for €35m last July.
Nama was also behind the sale of the Fota Island resort in Cork to a group of Chinese investors for a little more than €20m. The site had been developed at an estimated cost of €90m.
Irish Hotels Federation (IHF) chief executive Tim Fenn expressed concern at the level of State involvement in the sector, but stopped short of criticising Nama.
"The IHF maintains that it is essential for hotels to exit bank control and for ownership to be restored to those who have a long-term interest in the industry," he said.
Mr Finn also said there is an urgent need to address excessive levels of overhanging debt, which was estimated to stand at €6.7bn at the end of 2012.