Some hotels 'clearly not viable', says Cullen

MANY OF the hotels built because of tax incentives were never viable from the day they opened, Fine Gael tourism spokeswoman Olivia Mitchell claimed.

Nonetheless, she said, the banks were pouring working capital into those hotels, hand over fist, despite their lack of viability.

“On the other hand, those hotels that are viable, with enormous debt, cannot get working capital,’’ said Ms Mitchell.

She warned that simply talking to the hotels’ personnel, and sending marketing people to the US, was “not going to cut it”. The existing hotel infrastructure would be closed down if they waited for Nama, she added.

Minister for Tourism Martin Cullen said he was very much aware of the issue, as was the Government and Minister for Finance Brian Lenihan. “There is an issue here for Nama, when it is set up, because no doubt there is distortion. Some properties are clearly not viable . . . we all know where they are,” he added.

“They are distorting the market and are simply being kept open to turn some money over, which is having a negative impact on the competitive pricing that good hotels have been able to produce.’’

Mr Cullen said a “silver lining’’ was that the recession had led to a reduction in the cost base in Ireland. That had to happen, since there was no question but that “we had priced ourselves out of the market”.

However, he added, there was a difference between hotels where costs were being driven down to what were still commercial prices, albeit not at the same profit levels as before, and those clearly not viable. Mr Cullen said there were four areas of concern: demand, costs, access to credit and over-capacity. They could deal with demand because that was the job of the tourism agencies.

He added that 900 German travel agents had visited Ireland, which was a huge success. “For the first time, we are advertising on German television this year. So even with less money, we are expanding what we can do.”