Nama’s impact on hotels ‘overstated’

Finance Minister Michael Noonan has said Nama’s potential impact on the hotel sector is “overstated”.

In a written Dáil response, Mr Noonan said Nama’s debtors and receivers control 121 hotels, of which 117 are fully operating and four recently ceased trading.

In response to Independent TD Michael Healy-Rae, Mr Noonan said: “There are over 900 operating hotels in Ireland and, accordingly, Nama has exposure to only 13% of the sector. Its potential impact on the overall viability of the sector is overstated.

“Nama have advised that while the Competition Authority received complaints about Nama’s impact on the hotel sector, the authority decided not to pursue these complaints after engaging with Nama.

“Nama further advises that as a secured lender it will not advance funding to hotels that are not commercially viable as there would be no foreseeable return on such funding and, therefore, it would run contrary to Nama’s statutory commercial remit,” he said.

Last night, the president of the Irish Hotels Federation, Michael Vaughan, said: “I welcome Minister Noonan’s clarity on this as Nama-controlled hotels are being confused with bank-controlled hotels.

Mr Vaughan said that “the long-term issue with hotels is their indebtedness and there is a debt of €7bn in the sector, with Nama hotels representing only a fraction of that”.

“The biggest issue is credit and restructuring debt with banks. We have put an investment scheme to the Department of Finance that would allow equity be injected into owner hotels. Initial discussions have taken place and there is a lot of work to get it across the line,” he said.

Mr Vaughan added that hotels are able to make an operating profit “but don’t have the profits to service their debts. It is a very complex issue”.

Director of the family owned and run Flynn Hotel Group, Allen Flynn, said: “Nama-and bank-controlled hotels have created unfair competition and are forcing viable businesses out of business.”

The group employs 511 people in hotels across Kilkenny, Cork, Waterford, and Clare, and Mr Flynn said: “We are doing our utmost to maintain jobs and service and meet our requirements to make bank loan repayments, whereas these Nama-and bank-owned hotels are being run for cashflow to make an operating profit and keep the hotels open, and are not required to make capital or interest repayments.

“This has created an unlevel playing pitch and good people are now leaving the business disillusioned.”

Mr Flynn said that the situation requires intervention from Government to shut down hotels that are not viable.