The Irish Hotel Sector owes €7bn

Sponge Bob

4% of GDP or 5% of GNP, FFS.

The number is actually €6.7bn if you will forgive the rounding. As the debt is shared across 900 Hotels that means the average Irish Hotel owes €7.4m

Who told us all this?? The Irish Hotels federation when they went looking for their NAMA and debt forgiveness amounting to around 30% of the overall amount outstanding. This report, BTW, was prepared by a Board Member of the Irish Central Bank.

http://www.ihf.ie/press/12-10-timetoinvest.htm

The report recommends that decisive action be taken by lenders to restructure the debt of otherwise viable but over-indebted hotels, showing that debt restructuring of 38 per cent (€2.5 billion) will be required to bring the debt overhang to sustainable levels

No mention of the fact that most of this debt was incurred by geniuses like Bernard McNamara seeing as every property developer seemingly had to have his 'own' hotel in the last decade.

Secondly in subsidising Hotels with this writeoff of €2.5bn or €500 for every man woman and child in the state what are we to do for B&B owners who did not misinvest on this epic scale post 2000....and many of whom have no debt.

thebman

I think property developers were given tax incentives to build hotels or some obligations even maybe in some cases.

Don't know enough about it but I remember something like that which explains some of the hotels in the middle of no place.

Murt10

Positive article on Irish Hotels from todays New York Times

http://intransit.blogs.nytimes.com/2012/10/10/for-tourists-some-good-news-with-the-bad/?nl=travel&emc=edit_tl_20121013

andrew

I know the average is 7 million, but this seems like it could be one of those 80:20 situations in which the majority of the debt is held by a relatively small number of hotels.

antoobrien

andrew wrote: »

I know the average is 7 million, but this seems like it could be one of those 80:20 situations in which the majority of the debt is held by a relatively small number of hotels.

Yeah the likes of Citywest (now in NAMA) will massively distort any average figures that are produced.

[Jackass]

Staggering figures, but I would agree (and hope it's correct) with the above that a handful of bust companies are responsible for the lions share.

An awful lot of finance for developers could be leveraged on a big business like a hotel, especially when you can claim it's worth 200 - 300% more than it is and give fairy tale projections of future revenue..

MadsL

Any calculations for the number of zombie hotels (operating at a loss but propped up by the bank or NAMA) around the country. What impact are they having on properly run hotels as they slash rates.

Surely there are more than 26 as listed here;

http://www.nama.ie/about-our-work/properties-enforced/properties-subject-to-enforcement-action/?property_type=Hotel&country=

Namawinelake gives over 54% of rooms under bank or NAMA control, surely this is utterly unsustainable for the tourist sector and there is no need for these hotels to be opening as a loss-making business.
Spreadsheet here https://docs.google.com/spreadsheet/ccc?key=0AlV6jFjykyK6dE9UMUdiY2ZMa1pTWlJEQ3NvMDRac1E#gid=0

Tax breaks were at least partially blame for this nonsense.

[Jackass]

MadsL wrote: »

Tax breaks were at least partially blame for this nonsense.

The incentives given by the finance department during the entirety of the bubble are scarcely believable. It was inexcusably short sighted and you perhaps could sometimes find it hard to blame the developers (almost!) when the Government were coaxing them through the door like a nonce with a bag of sweets.

MadsL

[Jackass] wrote: »

The incentives given by the finance department during the entirety of the bubble are scarcely believable. It was inexcusably short sighted and you perhaps could sometimes find it hard to blame the developers (almost!) when the Government were coaxing them through the door like a nonce with a bag of sweets.

There's merit in wiping out the zombie hotels with taxpayers money just to try and save the sensible tourist industry that is left.

10 years of zombie hotel pricing will kill most independents, unless this Govt plans to go back into the semi-state hotel business they dumped finally through CIE.

(not a hotelier btw)

JustinDee

[Jackass] wrote: »

The incentives given by the finance department during the entirety of the bubble are scarcely believable. It was inexcusably short sighted and you perhaps could sometimes find it hard to blame the developers (almost!) when the Government were coaxing them through the door like a nonce with a bag of sweets.

Developers were not the only reckless borrowers in Ireland during these years and at the very end of the day, it is down to the individual, developer or average common everyday borrower, to make the decision to borrow beyond their means. This is what happened.
No-one forced anyone to do anything. Not the government, banks, developers, motor companies, credit card companies or overseas property vendors.
An unprecedented amount of Irish people became greedy and didn't give two stuffs of the risks or consequences.

creedp

JustinDee wrote: »

Developers were not the only reckless borrowers in Ireland during these years and at the very end of the day, it is down to the individual, developer or average common everyday borrower, to make the decision to borrow beyond their means. This is what happened.
No-one forced anyone to do anything. Not the government, banks, developers, motor companies, credit card companies or overseas property vendors.
An unprecedented amount of Irish people became greedy and didn't give two stuffs of the risks or consequences.

Who sought massive tax breaks for building hotels , private hospitals and the like .. I suppose the Govt came up with that one themselves ... I'll tell you what even though we have not been bombarded by developers to provide massive tax breaks for hotels and private hospitals, etc lets provide for them anyway for the hell of it! Comparing the individual borrowing too much/being offerred too much credit to buy a private residence to a wealthy developer wringing tax breaks for Govt for hotels and then borrowing more than they are worth to build them is comparing apples and oranges! Suits the Namaites though

thebman

JustinDee wrote: »

Developers were not the only reckless borrowers in Ireland during these years and at the very end of the day, it is down to the individual, developer or average common everyday borrower, to make the decision to borrow beyond their means. This is what happened.
No-one forced anyone to do anything. Not the government, banks, developers, motor companies, credit card companies or overseas property vendors.
An unprecedented amount of Irish people became greedy and didn't give two stuffs of the risks or consequences.

Well when you have a booming population reaching child having age and you have a history of property ownership because of poor renter protections then it is no surprise you end up with a housing boom.

Then when you have media getting advertising from that trying to encourage everyone to invest and a government increasing tax breaks for house purchasing and an open door immigration policy to get people in to rent those houses, it is no wonder people got involved in it since it is what all those people were pushing.

Yes people had a choice and I don't own a house or have any loans myself but realistically these people do have beef with the government who did everything they could to encourage them to get involved in a property pyramid especially when so many of the politicians had massive invested interest in property portfolios themselves.

So these people have legitimate issue with the government IMO who encouraged the behaviour as much as possible but I don't think they should be bailed out now. Better the whole country learns the lesson that government isn't to be trusted.

Just look at the tax breaks for cars with low emissions which are most likely going to be removed in this budget after only being in long enough to encourage people to buy new cars to avail of the tax breaks.

JustinDee

thebman wrote: »

Well when you have a booming population reaching child having age and you have a history of property ownership because of poor renter protections then it is no surprise you end up with a housing boom.

Then when you have media getting advertising from that trying to encourage everyone to invest and a government increasing tax breaks for house purchasing and an open door immigration policy to get people in to rent those houses, it is no wonder people got involved in it since it is what all those people were pushing.

Yes people had a choice and I don't own a house or have any loans myself but realistically these people do have beef with the government who did everything they could to encourage them to get involved in a property pyramid especially when so many of the politicians had massive invested interest in property portfolios themselves.

So these people have legitimate issue with the government IMO who encouraged the behaviour as much as possible but I don't think they should be bailed out now. Better the whole country learns the lesson that government isn't to be trusted

Still comes down to personal choice at the end of the day regardless of other stimuli. Your discretion is your own.

I bought a house through my own choice in 2006 on my return to Ireland and I live in it now. Have one low-amount credit card, no outstanding loans and a 97 reg car. No boats, second or third properties, unnecessary extensions, 'hot-tubs', oversized cars, holiday home in Ireland or overseas, housekeeping staff, child minders/nannies, multiple vacations abroad, outsized hi-fi & TV equipment etc etc.
That is living within my means and its not actually difficult to stick by it.

MadsL

The problem is not who did what. We know it was a clusterfuck.

The issue now is how to have a decent tourist sector without putting out of business those who managed their business sensibly and profitably.

Sponge Bob

If they pull the plug on the insane spa and golf resorts that infest the midlands, and write the debt off to nothing seeing as it is worth nothing the we can get the debt down to maybe €5bn fairly handy.

It is worth noting that Bank of Scotland Ireland has a greater amount of outstanding Hotel and Spa debt than all the NAMA banks do ( and that is including their sub €20m loans that did not transfer to NAMA) .

BOSI was an epically loony operation that deserves a book as much as ( or more than) Anglo does. Fortunately the British taxpayer will be rode for that particular mess.

Japer

Sponge Bob wrote: »

BOSI was an epically loony operation that deserves a book as much as ( or more than) Anglo does. Fortunately the British taxpayer will be rode for that particular mess.

It was an Irishman + an Irish team who headed up BOSI, was it not? think it was.

Sponge Bob

Yes, Mark Duffy is his name. He had the blessings of Head Office to 'grow' his loan book and by golly he did. Most especially after 2001.

http://www.irishtimes.com/newspaper/finance/2012/0225/1224312374490.html

With a total Irish loan book of £24.7 billion, two-thirds of Lloyds Irish loans are now impaired, up from 53 per cent at the end of 2010.

BOSI accounted for nearly half the LLoyds bank losses last year, €1.9bn out of €4.1bn

90 per cent of Lloyds £10.87 billion Irish commercial property loans were impaired at the end of 2011

and 20% of its Residential mortgage book was impaired. I doubt if any improvement will be noticed in the quality of their loan book when

In early 2009

http://www.finfacts.ie/irishfinancenews/article_1016003.shtml

Maurice Pratt, Chairman of Bank of Scotland (Ireland) said: “Mark has been in discussions with the Bank since the end of last year about leaving and the Board fully understands and respects his decision. He has made a unique contribution to BOSI’s development, leading its transformation from a modest beginning to the substantial, full service bank that it is today.

I doubt if Duffy ( or Pratt) will ever run a bank again.