Government departments have discussed transfering ownership of the loss-making Great Southern Hotel chain to Fáilte Ireland in recent weeks, sources have confirmed.
The chain, valued at €100 million, has been performing poorly in recent years and posted an after-tax loss of €2.2 million to the end of December 2004. Since then its position has deteriorated further and it is in danger of running out of cash in the first quarter of 2006.
In discussions between unions and the Departments of Transport and Arts, Sport and Tourism, the idea of moving the hotels outside the control of the Dublin Airport Authority (DAA) has been broached. Sources indicate the idea of bringing them under the control of Fáilte Ireland has strong union support.
The Minister for Arts, Sport and Tourism, John O'Donoghue, whose constituency hosts two of the hotels, is believed to be supportive of the idea, although no formal Government proposals have been drawn up. The Minister for Transport, Martin Cullen, will also have a role in any decision.
The DAA has refused to comment on the idea, but it is understood it will seek full compensation if the hotels are transferred out of its ownership. The board of the company meets next week and it is likely the future of the hotels will be discussed.
One Government source said yesterday: "The idea has been broached in discussions. It has the advantage of keeping the hotels within State ownership and that is important to several of the players."
While the DAA will want full compensation, the company would welcome the chance to rid itself of the hotels. Chairman Gary McGann has made it clear he is anxious to exit from loss-making businesses.
It is not clear whether a transfer to Fáilte Ireland would result in DAA getting a €100 million cash price for the hotels.
Another option might be to reduce some of the DAA's debts. For example the Government is due to transfer considerable debt from Shannon and possibly Cork onto the balance sheet of the DAA. One compromise might be to reduce this debt burden by €100 million, but this could run into trouble because of EU state aid rules.
Fáilte Ireland is the national tourism development authority. Set up in 2003, it brings together and builds on the functions previously discharged by Bord Fáilte and CERT, which originally owned the hotel group. The organisation's mandate is to develop and sustain Ireland "as a high-quality and competitive tourist destination".
At present the authority has no role in the hotel sector and it could prove highly challenging for the body to improve the chain's commercial prospects. While some hotels, like Dublin Airport, are believed to be profitable, others post large losses each year. Among these is the property in Rosslare and at the Corrib in Co Galway.
The Taoiseach has long been a supporter of the chain and regularly holidays at one of the hotels in Parknasilla, Co Kerry.
