THE CHAIRMAN OF the National Asset Management Agency has dismissed criticisms that the agency’s massive ownership of Irish hotels has resulted in an uncompetitive market and falling profits.
It emerged earlier this week that the price of Irish hotel rooms had dropped significantly in the last year, with accommodation in Dublin now cheaper than many European capital cities.
As a result, some had claimed that NAMA – which now controls 83 hotels, having taken over the facilities as collateral for underperforming loans – had used its resources to make the hotel sector overtly competitive, resulting in private hoteliers having to slash costs and massively reduce profits in order to stay in business.
Speaking at the AGM of the Licenced Vintners Association yesterday, Daly said that while he was aware there was excess capacity in the hotel market, NAMA had not been exerting its influence on the sector.
NAMA had acquired control of 83 hotels against which loans were secured, but hotels with debt due to NAMA accounted for less than 10 per cent of the total number of hotels in Ireland.
“NAMA owns the hotels loans, but has no ambition to become directly involved in the management of the hotel businesses concerned, longer than is necessary or indeed to hold these assets longer than necessary,” Daly said.
Moreover, the hotel sector was under the far greater influence of other non-national bodies, with two non-Irish institutions having a “significantly greater” exposure to the Irish hotel market – with those two institutions controlling around 300 hotels between them.
RTÉ this morning reported that Irish Hotels Federation president Paul Gallagher acknowledged NAMA was not to blame for falling prices, saying the market was simply oversupplied with 22,000 extra rooms being built between 2005 and 2008.
Current occupancy rates were around 50 per cent, but needed to be closer to 60 per cent in order for the market to become sustainable, Gallagher said.