Vol. 236 No. 11
asked the Minister for Transport and Power why arrangements were not made by Ostlanna Iompair Éireann to provide the medium priced hotel accommodation required by Aer Lingus instead of the latter company linking up with a private concern, Ryans Tourist Holdings.
16.
asked the Minister for Transport and Power if he will state, in relation to his statement in the Dáil on the 23rd October, 1968, when since 1964 and to whom he indicated first that it was desirable that an air company should be connected with a chain of hotels in Ireland.
With the permission of the Ceann Comhairle, I propose to take Questions 15 and 16 together.
The first investment by the air companies in a chain of hotels in this country was by Aer Rianta Teoranta in Irish and Intercontinental Hotels Limited in 1960.
From 1963 onwards the need for increased medium priced accommodation which would meet the needs of the air companies as well as general tourism requirements was the subject of numerous discussions and correspondence with both the airline and Bord Fáilte.
In July 1967 Aerlínte Éireann Teoranta wrote to inform me of their concern that adequate medium priced hotel accommodation in sufficiently large blocks strategically placed to cater for packaged holiday groups from North America would not be available. The company expressed their intention to explore whether direct intervention by them, if needs be on a basis of minority capital participation, would not encourage the provision of the necessary accommodation.
I discussed this proposal later in the month of July, 1967, with the chairman and director general of Bord Fáilte Éireann, who agreed with the view of the airline as to the need for additional accommodation of this kind and suggested that the airline should explore the position with existing hotel interests and with OIE. Aerlínte was informed of this view and of my agreement with it and in subsequent informal discussions with the chairman and general manager of Aerlínte Teoranta I encouraged them to pursue their enquiries with special emphasis on the desirability of entering into mutually satisfactory arrangements with OIE.
Detailed discussions took place between Aerlínte and Ostlanna Iompair Éireann Teoranta with a view to exploring the extent to which OIE could meet the airlines requirements for some sort of priority claim on suitable hotel accommodation to meet the requirements of the expected growth in package tour customers from North America. OIE was concerned for their part to provide hotel accommodation for all comers on an equal footing. The two organisations came to the conclusion that their individual interests would for the present best be served by separate arrangements in the hotel field.
On the 8th July, 1968, I was informed orally and in confidence by the chairman of Aerlínte Éireann Teoranta that he had decided on the advice of the management to recommend to the board of Aerlínte that they should take an equity interest in Ryans Holdings Ltd. as the only appropriate course to achieve the objectives of the airline in this field. I was later informed by the chairman that the board at its meeting on 18th July, 1968, after lengthy discussion and after seeing the reports of the consultants, gave approval in principle to a proposal being made in writing to Ryans Holdings Ltd. I was not aware before the 8th July, 1968, of the proposal to take an equity in Ryans Holdings Ltd. On the 27th August, 1968, I met the board of Aerlínte and discussed the proposal with them; the board then gave me full and satisfactory reasons in support of the commercial justification of the proposal. I was not informed in detail of the terms of the proposed agreement until my official approval was sought on 16th September, 1968, to the capital expenditure involved.
I agree that it was not intended that OIE should provide medium-priced accommodation to people who are interested in obtaining it.
That is not really the the point at issue. OIE felt they did not want to be associated with one particular airline in a form of hotel development which might not perhaps be in the interests of their all-over programme. As the Deputy knows, OIE have been expanding their own seven hotels and have built a motor inn and are planning to build other motor inns. They felt that, as they must develop continuously business with other airlines as an essential part of their programme, it would be wrong policy for them to be associated with one particular airline and to have capital investment in OIE which would indicate a programme was being developed for the particular purposes of the airline. That was the honest belief of OIE. I was very hopeful an agreement could be arrived at. I had to appreciate the belief of OIE in the idea of being independent of any particular airline or transport services outside their own particular field.
I appreciate the Minister's point of view in this matter. I am not suggesting he used influence in this matter but I would ask the Minister if, having regard to the fact that OIE and Aer Lingus are State bodies, the natural thing is to have a line-up between them? Is there any intention on the part of Aer Lingus or Aerlínte to go further into the catering field in providing medium-priced accommodation?
I think it is a question of decision by Aerlínte. They have a catering operation at Dublin Airport. They felt, in regard to the expertise involved in hotel management, it would be better if they took an interest.
Aer Lingus have been catering outside Dublin Airport. They do a great deal of outdoor catering and do it well. Would the Minister arrange a meeting between these two bodies and have an understanding about the catering business available for them, bearing in mind the profits of OIE as a result of their activities?
The profits of OIE are invested back in new hotel accommodation.
Experts had been sent from Taca.
Might I ask the Minister did I hear him say that this decision of his was taken in 1959 for the first time?
No. The Deputy apparently was not able to hear me. I am sorry. I said from 1963 onwards we were looking at the general position of hotel accommodation. There was a constriction of capital in 1965 and 1966, but towards the end of 1966 it appeared to lighten. In April, 1967, new increased grants were given to encourage particularly moderate priced accommodation, hotels, guest houses, and so on. It has become evident that we are solving the problem since there are now nearly 8,000 rooms of the inexpensive kind. We appear to be developing in the long term A star and A and B class accommodation. There is still room for the large medium B class hotel in the rural areas with a room rate of something in the neighbourhood of 25/- to 40/- according to season. It was when I was pressing to see what could be done about this that Aer Lingus came into the field in July, 1967, and pointed out that they were affected by the scarcity of this type of accommodation.
I understood the Minister last week to say that one of the reasons for this deal with Ryans was that they were the only firm with a ring of hotels around the country. I do not think I am misquoting the Minister. What I am trying to find out is when that decision was taken by the Minister, that it would be desirable to have a ring of hotels of this sort. Is that the discussion that took place in 1967?
I could not persuade any private company to institute a ring of hotels around the country. I have had no communication with any particular group about the establishment of a particular ring of hotels anywhere. This was related to when Aer Lingus started to study the project. They naturally wished to consider joining with a particular hotel group that was likely to produce the right kind of chain around the country.
I do not suggest the Minister had any contact or discussion with any group of hotels. Is it not perfectly clear now, as a result of the Minister's statement today what happened, that the Air Company's board were entirely blameless in this matter? What happened was that the Minister and the Government decided that it was desirable that the air company should make a bargain with a company that had a ring of hotels. That information was passed to Deputy Lemass and he, accordingly, this time last year, saw that Ryans would buy all the sites so that they would be the only company and the only people able to come in.
Hear, hear.
That is completely untrue. At the time the negotiations with CIE appeared to be fruitless— about March 1968. I had no further discussion with any private hotel chain, or with any hotel group of any description informally or unofficially.
I think the Minister is being codded in this case.
Whenever I met Mr. Dargan, in the course of discussions on other matters I asked how he was getting on since there was a misunderstanding with CIE. Mr. Dargan, quite rightly, said nothing. If I were to be engaged in these private negotiations, directly or indirectly, or by passing words to people, it would have been entirely wrong. There was nothing passed between me and Mr. Dargan at that time except that the matter was under consideration. There was no discussion by me, direct or indirect, with any person engaged in the running of hotel projects. At no time was there any information given to Ryans, directly or indirectly, which would suggest to them that, in planning for their hotel schedule, they would, if they planned it in a certain way, become the firm with whom Aerlínte would make the agreement. There was nothing of that kind and I hope the Deputy will take my word for it.
If the Minister cares to look at the dates on which Ryans bought these sites he will see that the dates are too coincidental to be unrelated. He will see they started this time last year and that the pattern was built up. It is obvious now where the leak came from. I do not accuse the Minister and I do not accuse the air company, but Deputy Lemass used the information he had as head of the Government and passed it on so that they would buy the sites.
Deputy Lemass had no kind of information of that sort. The reasons why Ryans decided to go into the hotel business was that they had been successful in the rental business, they had accumulated savings and they had a travel agency in London. It is evident from looking at the prospectus that there was every reason for Ryans to go into the hotel business, whether or not they made any agreement whatsoever with an air company or any other institution.
I am afraid the Minister is much too innocent.
They were the founders of Taca.
There was no connection.
What about the mart down in North Wexford?
What about Deputy Donegan?
What about Deputy Donegan?
You were the collector.
A letter of intimidation was sent out by Jack Lynch as Taoiseach.
This barrage of interruptions must stop. Will Deputies please allow Questions to continue?
I have been insulted by a Taca man, grossly insulted.
In reply to Deputy Sweetman, I think I indicated at the time of the last Estimate that in the 1965-1966 period there accumulated a large number of applications for hotel grants. I cannot remember the exact figure but it would be something in the neighbourhood of £5 million. Credit was restricted at the time and then, towards the end of 1966 and 1967, due both to the change in the attitude of the banks and to an improvement in the credit situation followed by the increased grants, a great many of these projects began to come to fruition. There was no more reason for Ryans to consider building an hotel chain than there was for a great number of hotels all over the country to come up with plans for extensions of accommodation of which the Deputy is fully aware. Indeed, Bord Fáilte have advised me that the total programme between 1964 and 1970 of 2,000 more rooms, of which I think 1,500 were in hotels and guesthouses, is likely to be met and there is at this moment in the pipeline projects at various stages from the very initial stage to the final stage of something roughly between £10 million and £15 million. There are projects in the immediate pipeline to the total of £3 million. It is scandalous to suggest that Ryans, as distinct from any other hotel proprietor in the country, had some particular reason for initiating a hotel project, when around the country other people were doing it.
You told us last week they were the only ones who were.
When a tourist wants a hotel what hotel will be rung up? Ryans?
What car hire business do Aer Lingus recommend?
If the Deputy puts down a question about that I shall answer it.
I shall.
