Impact NAMA has on Irish Hospitality Industry

ToyotaMad94

Hi,
Just wondering what the wide-ranging impact the National Asset Management Agency (NAMA) is having on the Irish Hospitality Industry. Any pointers will help,
Thanks.

johnnyskeleton

I suppose there is plenty anecdotal evidence that Nama is causing prices to go down, driving other hotels out of business etc

johnnyskeleton

johnnyskeleton wrote: »

I suppose there is plenty anecdotal evidence that Nama is causing prices to go down, driving other hotels out of business etc

How so? The stated aim of NAMA is to put a floor under property prices, this would mean keeping costs of doing business artificially high.

And that is before you throw in the cost of NAMA in increased taxes.
Here is Lenihan stating the aim of NAMA is to establish a floor in prices:

http://www.youtube.com/watch?v=pWlz1IKWfw4

https://www.youtube.com/watch?v=pWlz1IKWfw4

Without NAMA we would have more firesales with price drops that would make running hotels more viable. The case of the hotel on Rosnowlagh beach is the perfect example.
The business overheads were too high and now it is viable again under a smaller mortgage.

Solair

It seems to manage to give us all the problems of a deep recession without the advantages of falling costs!

Slydice

johnnyskeleton wrote: »

I suppose there is plenty anecdotal evidence that Nama is causing prices to go down

maybe but there's also evidence prices are not going down:
http://www.irishexaminer.com/breakingnews/business/hotel-prices-up-4-in-2011-543350.html

Hotel prices up 4% in 2011
Tuesday, March 13, 2012 - 10:50 AM

Hotel room prices in Ireland have risen for the first time in four years, new figures have revealed.

According to the latest survey from Hotels.com, the cost of a hotel room here increased by 4% last year, with the average price now at €82 per night, compared to €79 at the end of 2010.

johnnyskeleton

blindjustice wrote: »

Without NAMA we would have more firesales with price drops that would make running hotels more viable. The case of the hotel on Rosnowlagh beach is the perfect example.
The business overheads were too high and now it is viable again under a smaller mortgage.

the hotels lobby is constantly going on abou how Nama hotels are supposedly charging below cost for rooms and all that nonsense. Basically, Nama receivers will try to turn a profit by cutting costs and cutting prices. The other hoteliers complain because this is competition which they have not really expected.

golfwallah

For thread on imact of NAMA on the golf business sector, see: http://www.boards.ie/vbulletin/showthread.php?t=2056341847

Roundwood House

I'm just wondering if you (johnnyskeleton) have any basis in fact for your statement that NAMA hotels charging below cost for rooms is nonsense? As a country house hotel owner struggling to compete with NAMA hotels I find it deplorable that you can publish such throw away comments and simplify the argument in a way that is incredibly insulting to all independent hoteliers. Please back up your comments with some facts or retract them

golfwallah

Data on below cost pricing is contained in the “Failte Ireland Tourism Barometer” (results of a survey conducted in September 2011):

Page 3: “Financial matters dominate issues of concern, with about two in three (65%) operators giving the state of the economy as a key issue of concern, and over half (57%) stating low-priced competition and fuel and energy costs respectively”.

Page 17: “Aggressive pricing by NAMA or bank-owned hotels is still a major issue of concern for hotels with other types of ownership as the industry deals with over-supply (discussed in more detail in section 8 later). It is possible for other hotels to compete, but this could ultimately have a negative affect on quality because there is no money left over for investment in the product”.

Page 30 (Section 8): Contains graph of main issues of concern, of which “Low-priced competition” is the 2nd highest concern:-
“8.2. Over half (57%) of operators state low-priced competition as a key issue of concern affecting their business this year.
8.3 By far the most frequently mentioned source of such competition is NAMA or bank-funded hotels”.

For full report, see: http://www.failteireland.ie/FailteCorp/media/FailteIreland/documents/Research%20and%20Statistics/Current%20Tourism%20Performance/September-2011-Failte-Ireland-Barometer.pdf


Minister for Transport, Tourism and Sport (Deputy Leo Varadkar) response to question on the issue in November 2011:
http://debates.oireachtas.ie/dail/2011/11/09/00058.asp

Roundwood House

Thanks for that golfwallah. I did intend to also answer the original question posted about the impact of NAMA on the hospitality sector but you've saved me the effort.
If anyone's interested the following is a link to a satirical assessment of the impact of NAMA hotels on the tourism industry as a whole.
http://thehiberniatimes.com/2012/02/18/the-good-life-an-open-letter-to-ireland/16055

Delancey

As I understand it the real issue of the so-called ' zombie hotels ' is the tax breaks that Fianna Fail handed out to their pals , the argument is that if these hotels close down now then the investors will have all their tax relief clawed back and thus there exists an incentive to keep inherently unviable hotels open for business.

I thought the Government said they would amend the legislation and thus permit hotels to close without investors getting chased by the Revenue ?