The Irish Hospitality Industry illustrates the law of unintended consequences Pt 2

    150 150 Daniel Fountain
    • 0

    With 10% of the hotels in Ireland under the administration of the Irish National Asset Management Agency, and the remainder struggling in a market place that shrank by some 30% through 2009 and 2010, the approach to operating hotels has come under severe monetary pressure. Meeting loan repayments agreed in better times places extraordinary pressures on hotel managements.

    Ireland is not unique in experiencing difficulties but the way in which investment has been directed at a national level has had unintended consequences for many hotels. The EU has a policy of funding infrastructure improvements in countries joining the European Union (mind you I didn’t see any evidence of it when the UK joined). Like Poland, Ireland has benefitted with a new motorway system. This has had a mixture of effects on business hotels in particular.
    Whilst luxury hotels such as the Cliff House Hotel in Ardmore have seen a very profitable lift in bookings as business people can now drive to the coast from Dublin so easily, many business hotels have suffered. Prior to the motorway system being built driving around Ireland was purgatory. Roads were narrow and potholed, keeping speeds well down, so going anywhere by car was a time consuming process.

    Now not only has the new motorway system cut journey times, in many cases by half, but improvements to many rural roads have also increased speeds throughout the road system. It is now possible to drive from Dublin for a business meeting in, say, Wexford, and back, in a day. Previously it needed an overnight stay. Many internal air routes, always short within Ireland, have now been closed down and are only being reopened with major subsidies.

    Business traffic is much reduced anyway, but now business hotels are finding themselves with reduced use by those businesses that are still busy (note that the Irish economy is growing rapidly again, much more so than the UK generally) as the improved roads system reduces the need for overnight stays. This ‘double whammy’ has led to increasingly desperate measures being taken to keep hotels solvent, and the policies of NAMA, which says quite clearly that it has no interest in operating hotels, broadens the areas in which this desperation becomes evident to the guest.

    Daniel Fountain / 02.11.2011

    Editor, Hotel Designs


    • 0