The Great Southern chain of hotels is expected to show profits of £3.5 million (€4.4 million) for last year when Aer Rianta publishes its annual results next month.
The increase of more than 20 per cent in profits reflects the buoyancy of the Irish tourist industry. Strong growth is expected again this year, pushing the price the chain could command to well in excess of £50 million. The hotels are set to be sold off as part of a review of Aer Rianta's strategic direction which could see the airports authority privatised and ultimately floated on the stock market. How the hotels - which are seen as a non-core business - would be disposed of is not yet clear. A management buyout of the group remains a possibility while it has yet to be decided whether the chain would be sold as a block or whether each hotel would be disposed of separately.
A consultants' report drawn up by Investment Bank of Ireland, Lehman Brothers and Andersen Consulting on future options for Aer Rianta says the best way to realise value is to sell the hotels separately rather than as a block.
However, in a report to Government on the strategic direction of the company, Aer Rianta said the hotels would be sold as a group if possible.
The Minister for Public Enterprise, Ms O'Rourke, will shortly appoint consultants to carry out a report on the flotation of Aer Rianta and this should also include a recommendation on the sale of the hotel chain.
The Taoiseach, Mr Ahern, said at the IMI conference in Killarney over the weekend that the Government should receive the consultants' report in two months. He also promised that the trade unions involved - which have expressed unease about the sell-off - would be fully consulted on any moves. The Taoiseach also noted the Aer Rianta recommendation that the hotels be sold as a unit, a likely indication that the Government will favour this route, which is unlikely to face as strong opposition from the unions as would a break-up of the chain.
There are eight hotels in the chain including the flagship hotel at Parknasilla in Kerry, two in Killarney, one in Galway and one in Rosslare, Co Wexford. Aer Rianta recently opened an outlet at Dublin Airport. The hotels employ 600 permanent staff but are in need of investment and some £33 million in capital expenditure is planned for the next five years. Most of Great Southern's rivals in the Irish market are expected to be interested in the group when it comes on the market while it could also attract a number of overseas bidders.
The family-owned Fitzpatrick chain and the publicly-quoted Ryan Hotels are among the Irish companies thought likely to make a bid for all or part of the group.
Ryan Hotels, which has a similar business, is expected to be particularly interested although there could be some overlap in location between the two groups.
However Jurys, which is now the largest hotel group in the State following the takeover of the Doyle Hotel Group, is unlikely to bid for the full Great Southern chain, sources say. But in a break-up situation, it might look at one or two of the properties.
Jurys recently acquired Doyles in a deal worth nearly £250 million, paying around £119,000 per room for the hotels.
Although the city-based Doyle chain has a very different profile to the Great Southern hotels, the price fetched suggests the Great Southern hotels - many of which have very valuable property attached - will not come cheap.
