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Seanad Éireann debate -
Tuesday, 3 Dec 2002

Vol. 170 No. 18

Adjournment Matters. - Tourism Industry.

I am concerned, as the Minister is aware, by the blunt recent announcement that the Torc Great Southern Hotel in Killarney would not reopen and was on the market to be sold by public tender without consultation with staff. There are persistent rumours in Kerry regarding the hotel at Parknasilla and surveyors have visited there. Will the Minister scotch these rumours because it is widely believed that the Parknasilla hotel is unofficially on the market? I understand there is concern in Galway regarding the Corrib hotel and that it is the intention of the hotel group to reduce bit by bit. I believe that the board of the hotel in Derry, if not the Aer Rianta board, is not happy with its involvement there.

There was a recent sale of 4.6 acres of land attaching to the Torc Great Southern Hotel in Killarney. The railway company was not consulted despite its difficulties in Killarney. The Minister will be well aware of the assurances given in the other House by the then Minister for Public Enterprise, Senator O'Rourke, on 18 May 1999, that there would be no change without the fullest consultation, in particular with the staff of the hotels, and with the overriding objective of maintaining and maximising employment. That commitment has been reneged on.

The Minister, Deputy O'Donoghue, whose constituency is Kerry South, assured staff through the local media that they would be accommodated in the Torc Great Southern Hotel in Killarney. From my consultation with staff, they have no understanding of that and do not believe it. They had a meeting yesterday or today and will ballot with regard to possible strike action.

The hotel group is a wholly owned subsidiary of Aer Rianta and its board holds the view that the hotel group is not central to its operations, is non-core activity, that it should exit the hotel sector and that the proceeds of the sell-off should be directed towards the airports. A report by Warburg Dillon Read and AIB Capital Markets agreed with the board's view in that regard. This raises the most fundamental question with regard to the future of the hotels. Should they ever have been placed with Aer Rianta? Does the Government intend that the hotel group will continue with Aer Rianta or will it reallocate the hotels within the semi-State sector to a more convivial home? Is it the intention to see them reduced by individual sell-offs, as is believed in parts of the country?

There is a clear public need for a new and expanded railway station in Killarney. The station is adjacent to both hotels and is the only station in the country into which trains must reverse, on their way from Tralee to Dublin. There are six or seven acres adjoining the Torc Great Southern Hotel, the end of which would make an ideal site for a train station. This need not interfere with the sale of the hotels and there is no need to sell the hotels for that. The urban council in Killarney is having difficulty obtaining land for housing and that should be kept in mind if some land is surplus to requirements. I do not accept that the hotel is surplus to requirements but there are six or seven acres with the hotel which at the stroke of a pen were lost to the railway company.

I tried to raise the Torc Great Southern Hotel land sale a month ago but my question was disallowed due to lack of ministerial involvement. A Dáil question received the reply that the Minister has no direct function with regard to the matters raised as they are a day-to-day matter for the company concerned. I welcome the Minister of State to the House and thank him for his courtesy and kindness regarding the matter, in anticipation of his reply. I am disappointed that an allied matter was ruled out of order, through no fault of the Cathaoirleach. There seem to be many inconsistencies in the responses that have been given in the past week or more.

I thank Senator Coghlan for raising this issue. The Great Southern Hotels Group is a wholly owned subsidiary of Aer Rianta CPT. The group currently employs the equivalent of 750 full-time staff and owns nine hotels, five of which are located in prime tourist destinations. A new Great Southern Hotel adjacent to Cork Airport opened last year and fulfils the group's objective of having a hotel at each of the main tourist gateways. The company also has a minority interest and a management contract in the four-star City Hotel in Derry.

The slowdown in the world economy, the foot and mouth disease crisis in the UK and the impact of the events of 11 September combined to make last year an arduous one in the Irish hotel sector. The Great Southern Hotels Group was also affected and recorded a 34% drop in profits from €4.8 million in 2000 to €3.2 million in 2001. Retention of market share and cost containment were the group's main focus this year in order to position it for the expected recovery next year.

The Killarney Great Southern Hotel will celebrate its 150th birthday in 2004. I understand from Aer Rianta that an examination of the two Great Southern Hotels in Killarney in 2000 concluded that extensive renovations and refurbishment were required to be carried out in both hotels if they were to continue in business, particularly with regard to meeting the new fire regulations and safety requirements. The board of Great Southern Hotels decided in early 2000 to carry out a full restoration of the old Killarney hotel at a cost of €15 million and to keep the other hotel, the Torc, open while this was being carried out and to review its position when this project had been completed. The financing for the restoration of the old Killarney hotel was to come from the sale of surplus assets in the group. The objective of re-establishing the old hotel as Killarney's leading hotel has been achieved and the hotel was reopened in the middle of the year to resume its year-round operation.

I understand that if the Torc Hotel were to be kept operational it would require expenditure in the region of €8 million to €9 million which, in the opinion of the board of the Great Southern Hotels, could not be justified, particularly as this hotel operated for only six months each year. The Torc Hotel has now closed and it is not the intention of the board to reopen it. The board recently decided to offer the Torc for sale by public tender in the near future. The Great Southern Hotels Group is committed to accommodating the staff of the Torc either at the old hotel in Killarney or with an agreed voluntary redundancy package. The sale of the Torc will complete the group's strategy for its Kerry portfolio and ensures that borrowing for capital investment purposes remains at an acceptable level.

The board of Aer Rianta accepted the proposals of the board of Great Southern Hotels and fully endorsed the strategy. There are no proposals at this time for the sale of any other hotel, including the Parknasilla Hotel, in the Great Southern Hotels chain. Overall, planned investment by the Great Southern Hotels Group over the next five years will amount to approximately €33 million.

In a strategic review undertaken in 1999 for the Minister's predecessor, the board of Aer Rianta considered that the Great Southern Hotels Group, while operating successfully, is non-core to Aer Rianta's airport management operations. The board recommended that it should exit from this business and use the proceeds from the sale towards financing capital expenditure programmes at the State airports. A subsequent report, prepared by Warburg Dillon Read and AIB Capital Markets for the former Minister, agreed with the view of the Aer Rianta board on this matter.

The Minister for Transport has indicated that he will revisit the question of the future of the Great Southern Hotels Group in due course. He stated, however, that he intends to concentrate for the time being on the priority issues of aviation and transport in general as set out in the programme for Government. I am unfamiliar with the question of land availability and will raise this issue with the Minister when he revisits this subject.

I appreciate the Minister of State's response regarding the land availability question. He said that hotels are not core to Aer Rianta's business and that while there are currently no proposals in that regard, it will be revisited. Does that not mean there will be further sales with a view to a management buy-out? Will they be reallocated within the State service?

As the Senator is aware, such decisions are a matter for State boards but the Minister has agreed to revisit the issue of the Great Southern Hotels in due course. It might become the subject of a motion the Senator tables in this House.

The Seanad adjourned at 8.30 p.m. until 10.30 a.m. on Wednesday, 4 December 2002.

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