Vol. 451 No. 3
5 Mr. B. O'Keeffe asked the Minister for Transport, Energy and Communications if he intends to grant permission to Aer Rianta to build an hotel adjacent to Dublin Airport; and the reason for the delay experienced in advancing the project. [6601/95]
The proposal by Aer Rianta for the building of an hotel at Dublin Airport is being examined in my Department.
Aer Rianta's core business is the management and development of Dublin, Shannon and Cork airports. The company is proposing an investment programme of over £200 million on upgrading the three airports to cater for traffic growth to the year 2000. The scale of this investment has major implications for Aer Rianta's finances.
My Department is at present reviewing Aer Rianta's forward airport development programme and Aer Rianta's ability to fund it. This review includes assessment of forecast cash flows and profit projections to the year 2000 of the Aer Rianta Group, including the hotels subsidiary.
No decision will be taken on the Dublin airport hotel proposal until this review has been completed.
Is the Minister aware that I am referring to an hotel company as against Aer Rianta? Is he aware that 12 months ago a submission was made to his Department indicating that a second hotel was needed because the demand was outstripping the supply of bed nights available adjacent to the airport? Will the Minister not agree that on economic grounds and the job creation potential that would result from the provision of a second hotel adjacent to Dublin airport, this project should receive immediate approval?
I agree the project is an important one. It is precisely for that reason that it needs careful consideration. I do not accept the Deputy's point that there has been undue delay in considering it. Since that report was furnished to the Department the market has changed dramatically. For example, I have read public comments of various investors' intentions to invest in new hotels in Dublin. Bearing in mind all these planned projections, one must question whether there is a market for all of the new hotel ventures planned for this city. It is against that background that the matter must be considered. Aer Rianta already has a broad span of activities, managing and developing three large airports, their core business, on which I should like them to concentrate and for which the company was originally established. Any proposals in regard to its subsidiary activities cannot be considered in isolation from their possible implications for those core functions. That would be foolhardy, particularly at a time when the company has in hand a massive investment programme for development of the airport. I have no doubt Deputy Batt O'Keeffe would not like to see me encourage Aer Rianta to divert investment from Cork Airport to the building of a hotel in Dublin——
Or in Tipperary.
What I really want Aer Rianta to do is concentrate and invest its skills, energies, expertise and available capital in developing its core activity, which is the management of the airports.
While agreeing with the Minister that many things have changed dramatically, will he confirm that the throughput of passengers at Dublin Airport increased by some one million over the past 12 months? Would he also agree that already this year there has been an increase of 20 per cent in throughput of passengers, which means that an additional one million passengers will pass through Dublin Airport? Would he agree that the Great Southern Hotel group might perceive this to be a vote of no confidence in them even though that group, with seven hotels under its aegis, produced a profit of £1.5 million last year? With a second hotel adjacent to an airport that is obviously flourishing, would the Minister agree that it would make good economic sense for him to allow Aer Rianta to proceed with this development?
This proposal cannot be viewed in isolation. Anybody who has studied Aer Rianta accounts and the activities of the Great Southern Hotel group will accept there has been very poor return on the capital funds tied up by Aer Rianta in that project. While there may be strategic reasons for the provision of a second hotel, it would be irresponsible of me to make such a decision without first having studied very carefully its impact on the overall operational dimension of Aer Rianta activities. Its first priority must be the conduct of the business for which it was established — to improve airports, generate greater activity by way of cheaper costs and greater access to this country.
Bearing in mind that we shall see the removal of duty free facilities towards the end of this century and that those facilities at Dublin Airport yield a profit of £15 million at present——
The Deputy is introducing new matter and would appear to be supplying information rather than seeking it.
Since it is the Minister's intention, and certainly was that of the previous Government, that we should be involved in strategic planning——
Will the Deputy please pose a question?
In order to lessen the impact of the loss of duty free facilities at airports generally by the end of this century, would the Minister agree it would be advisable to involve ourselves in projects that would generate substantial funds for Aer Rianta to make up for the shortfall?
I fully appreciate Aer Rianta faces a pending loss of revenue and profits from the changes that will take place. It is for that very reason we are closely examining its development programme. I have sought professional advice and have recruited a firm of consultants to assist my Department in examining Aer Rianta's cashflow forecasts, profitability projections and plans for the future, thereby enabling planning in advance of the duty free regulation changes about to take place. It is possible that the hotel the Deputy mentions may from part of its plans. I will be examining the overall position very carefully but as of now I have not learned sufficient positive news about this project to be entirely enthusiastic about it. I have neither ruled it in nor out. It will be the subject of close examination and when I receive the consultants' report and an overview of the activities of Aer Rianta, I will make a decision in respect of that and the company's other activities.
Time is of the essence here.
Does the Minister agree it would make no sense for the private sector to invest in the construction of hotels if the State follows a policy of investing in their construction and that that would be a confusing signal to send out? Bearing in mind that there is a buoyant market for new hotels, would the Minister say why the State would become involved in investing, particularly remembering the history of State-owned hotels when many millions of taxpayers' money went down the drain?
I can accept many of the points advanced by Deputy Molloy. My views would not be far removed from his but——
Now we are getting to the nub of it.
I have already said I am approaching this subject with an open mind but my eventual decision will be based on the report of the consultants and the overview I received of Aer Rianta activity. The direct answer to the Deputy's question is that I have made no decision yet in respect of either a new hotel or the Great Southern Hotel group. It is under examination.
It is a case of following one's common-sense instincts.
