Monday 11 December 2017

Irish hotels have debts of €6.7bn including NAMA loans – report

Ailish O’Hora

IRISH hotels have €6.7bn of debt on their books and €2.5bn of that needs to be restructured to make borrowings sustainable in the long term.

A report from the Irish Hotels Federation said one of the issues in addressing that debt is that smaller hotels outside urban areas are having difficulties attracting outside investment particularly from abroad.

The €6.7bn figure has been adjusted to include both NAMA and Bank of Scotland debt which is not included in Central Bank figures.

“The loans to the hotel sector owned by NAMA are not included in the Central Bank’s figures even though the borrowers still owe the full amount of the loans to NAMA,” according to the report.

According to the author of the report, economist Alan Ahearne, one way to address this debt would be the use of qualifying investor funds which would identify a group of hotels as an investment subject.

He added that tax reliefs would be subject to specific caps and would provide an incentive for such a scheme.

Since the onset of the economic crisis, accommodation prices have fallen – revenue per room is down 30pc with profit per room off 44pc.

Average room rates fell to €72 last year from €92 in 2007.

But occupancy rates have also fallen and are down from nearly 70pc in 2007 to 61.4pc in 2011.

''Now is the time for the Government to take decisive action to help improve access to equity finance and restore financial stability to the sector,'' said Tim Fenn, chief executive of the Irish Hotels Federation.

''This issue cannot be allowed to fester and jeopardise future growth and job creation in the wider tourism industry. If we don’t act now, we’ll be picking up the pieces of a failed tourism industry in five years time,' he warned.

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