The State-owned Great Southern Hotels group may have to be closed due to spiralling losses, the head of the Dublin Airport Authority has warned. Emmet Oliver reports.
Gary McGann said the nine-strong hotel group, which the authority owns and operates, has had "four consecutive years of trading losses", and the financial and operational position of the chain was "very bleak".
The Government has in the past rejected any attempt to sell or close the hotels, but Mr McGann said a decision was needed.
"The status quo is not an option," he told a meeting of the Joint Oireachtas Committee on Transport yesterday.
The Taoiseach is believed to be a major supporter of the hotels and is a regular guest at the group's flagship, the Parknasilla Hotel near Sneem in Co Kerry.
Mr McGann said the hotels were experiencing "flat" occupancy rates, declining sales of alcohol and continuously rising costs out of line with industry norms.
He said payroll costs accounted for 45 per cent of the hotels' turnover, compared to an industry norm of about 35 per cent.
Mr McGann, a former Aer Lingus chief executive, said the Dublin Airport Authority, formerly Aer Rianta, had a duty to stop the "haemorrhage from loss-making activities".
Challenged by some members about the chain's future, he said: "The danger is they will have to be closed if something isn't done."
Mr McGann also called on the Government to make a decision on a new terminal for Dublin airport. "Dublin airport urgently needs additional capacity to meet the reasonable expectations of its growing numbers of passengers," he said. But his main warning concerned the hotel chain, which has been facing strong competition from new entrants.
The Great Southern Group operates at nine locations, including landmark sites in Killarney and Galway.
Mr McGann, who took over the chairmanship of Dublin Airport Authority last year, also warned that airport charges were likely to rise in Dublin, regardless of what site the Government selects for new terminal space.
He said it was a "racing certainty" that whoever built the terminal would have to introduce airport charges above current rates.
Chairman of the Shannon Airport Authority Pat Shanahan told the committee that Shannon would like to see a "transition period" before the airport's stopover rule was ended. He said ideally this transition period should last up to five years.