Aer Rianta's Great Southern Hotel group has taken a quarter stake in a new £12 million sterling (€19.2 million) hotel in Derry, which will open in May 2002.
The State-owned company is investing more than £2 million initially in the City Hotel at Queen's Quay in the Waterfront area of the city, which will employ 120 people.
Great Southern will manage and operate the hotel, which it will own in partnership with three Derry businessmen who own the development site.
An accountant, Mr Patrick Durkan; a pub and restaurant owner, Mr Brendan Duddy; and the owner of a manufacturing firm, Siesta Blinds, Mr Billy McCartney, will each take a quarter stake, costing more than £2 million, in the hotel. Mr Durkan's brother, Mark, is an SDLP MLA and Minister of Finance and Personnel in the North's power-sharing Executive.
The project has secured about £3 million in the form of grants from the Northern Ireland Tourist Board, the Department of Environment in the North and the International Fund for Ireland.
This is not Great Southern's first venture north of the Border. It previously owned the Russell Court hotel in Belfast, which was sold to a local entrepreneur and boxing promoter, Mr Barney Eastwoood, in the 1970s.
Construction of the 126-room hotel is expected to begin in November, if not sooner. It is anticipated that the accommodation will be of four-star standard.
Despite the advice of two separate consulting groups appointed by Aer Rianta and the Government, it is now clear that the State company will retain its ownership of Great Southern.
Studies by Lehman Brothers and Warburg Dillon Read concluded that Aer Rianta should sell the group to the private sector on the basis that the hotels are peripheral to its core airport management business. Observers have also questioned the logic of the State owning a hotel group - which is expanding - at a time when there is no shortage of private investment in the industry.
Yet the Minister for Public Enterprise, Ms O'Rourke, said in the Dail on June 20th that she did not envisage selling the Great Southern hotels to the private sector.
It is thought that managers at Aer Rianta do not regard this as an economic decision, but a political one. The Independent TD, Mr Jackie Healy-Rae, has expressed opposition to the sale of group, which has three hotels in his Co Kerry constituency. The support of Mr Healy-Rae and other Independent TDs is crucial to the Government's majority in the Dail.
The group, which already operates eight hotels, will expand further next March when it opens a new 81-room hotel at Cork Airport, worth £7 million.
Separately, Aer Rianta is expected shortly to appoint Mr Bob Hillard as general manager of Dublin Airport. The company is also expected to appoint a successor to the general manager at Shannon Airport, Mr Barry O'Shea, whose retirement is also imminent.
