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Adjournment Debate. - Hotel Closure.

Tuesday, 26 November 2002

Dáil Éireann Debate
Vol. 558 No. 1

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[137]Ms B. Moynihan-Cronin: Information on Breeda Moynihan-Cronin Zoom on Breeda Moynihan-Cronin I welcome the opportunity of raising this important issue. It is not just important in my constituency of South Kerry, but is of national importance. I welcome the Minister of State, Deputy McDaid, and hope he will give me the answers that are required. I want to put on the record of the Dáil for a second time a quotation from the former Minister for Public Enterprise, Deputy O'Rourke, speaking on 18 May 1999: “Any decisions in relation to the future of the hotel group will only be taken after the fullest consultation, in particular with the staff of the hotels and with the overriding objective of maintaining and maximising employment”. When Deputy O'Rourke made these remarks in the House during a debate on the future of the Great Southern Hotel Group, was she being genuine and honest or was she attempting to lead the workers in the hotels up the garden path? I suspect that the latter is the answer. How is it that, little more than two years after that solemn promise was made in the House, the Torc Great Southern Hotel in Killarney has been closed and is to be sold without consultation with either the unions or the employees at the hotel? I hope the Minister will answer that simple question.

Last Friday morning the workers in the Torc Great Southern Hotel in Killarney were summoned to a meeting at very short notice in the hotel and informed by the chief executive of the Great Southern Hotels that the hotel would not open next year and would be sold by the group. The staff had no idea that the meeting was about to take place and the news hit them like a bolt out of the blue. The trade unions received no notification that the meeting was taking place. In fact some local and national SIPTU officials were not aware that the meeting was taking place until it had concluded. This is a disgraceful way in which to treat workers. They were dragged into a meeting and literally fired at a moment's notice without as little as a representative of their trade union present. Not even the Government Minister from south Kerry was aware that the meeting was taking place and claimed to have been shocked at the announcement that the hotel is to close. This is quite extraordinary.

This episode flies in the face of former Deputy Mary O'Rourke's commitment to the House in 1999 that no changes in the status of the hotel group would take place without consultation. It proves too that relations between the Government and Aer Rianta are at such a low ebb that this announcement was made without the knowledge of some Ministers. Aer Rianta and the Government are currently at loggerheads over sleazy scandals like brandy, cigars and Christmas [138] presents, but are relationships really so bad that employees in one of the most valuable hotels in my constituency have to be treated in such a shoddy manner?

I would like the Minister to state clearly that this is not the beginning of the end of State ownership of the Great Southern Hotel Group, which is the standard bearer for the hotel and tourist industry. Is it the case that, despite all of the promises of my two constituency colleagues in south Kerry in the run up to the last election that the hotels would be retained in public ownership, that the Government is now intent on flogging the family silver without even meeting the unions and employees to discuss it?

Will the Minister for Transport meet the unions immediately, as they have requested, to discuss the future of the hotel and its employees? Will the Government also confirm or deny in the House tonight that a valuer has been to Parknasilla Great Southern Hotel and other hotels in the group? Will the Government apologise to the staff for the appalling way in which the workers at the hotel were treated last Friday and indicate that he will seek a reversal of the decision to sell the Torc Great Southern. If the Minister and Aer Rianta management are in such conflict with each other at present then either he should go or they should go. It is a disgraceful way to treat workers who have been in the hotel over 30 years.

Will the Government stop pussyfooting around the issue of putting hundreds of jobs of hotel workers on the line and state once and for all that the passion of the Progressive Democrats for privatisation has not completely consumed Fianna Fáil and that the Great Southern Hotel Group will remain in public ownership?

Minister of State at the Department of Transport (Dr. McDaid): Information on James McDaid Zoom on James McDaid I thank the Deputy for raising this matter and giving me the opportunity to put the facts before the House. The Great Southern Hotels Group is a wholly owned subsidiary of Aer Rianta. It currently employs the equivalent of 750 full-time staff and owns nine hotels, five of which are located in prime tourist destinations. A new GSH hotel adjacent to Cork Airport opened last year, which fulfils the group's objective of having a GSH hotel at each of the main tourist gateways. The company also has a minority interest and a management contract in the four star City Hotel, Derry.

The slowdown in the world economy, the foot and mouth disease crisis in the UK last year and the impact of the events of 11 September combined to make last year an arduous one in the hotel sector. Great Southern Hotels Group too was affected, recording a 34% drop in profits from €4.8 million in 2000 to €3.2 million in 2001. Retention of market share and cost containment were the group's main focus this year in order to [139] position it for the expected recovery next year. The Killarney Great Southern Hotel will celebrate its 150th birthday in 2004. I understand from Aer Rianta that an examination in 2000 of the two Great Southern Hotels in Killarney concluded that extensive renovations and refurbishment were required if they were to continue in business, particularly with regard to meeting new fire regulations and safety requirements. The board of Great Southern Hotels decided in early 2000 to carry out a full restoration of the old Killarney hotel at a cost of €15 million. It was also agreed to keep the other hotel, the Torc, open while this restoration was being carried out and to review its position when the restoration project had been completed.

Ms B. Moynihan-Cronin: Information on Breeda Moynihan-Cronin Zoom on Breeda Moynihan-Cronin That is not what was said during the election campaign.

Dr. McDaid: Information on James McDaid Zoom on James McDaid The restoration of the old Killarney hotel was to be financed by the sale of surplus assets in the group. The objective of re-establishing the old hotel as Killarney's leading hotel has been achieved. It was reopened in the middle of this year to resume its year round operation. I understand that expenditure in the region of €8 million to €9 million would be needed to keep the Torc Hotel operational. Such expenditure could not be justified in the opinion of the board of the Great Southern Hotels, particularly as the hotel operates for only six months each year.

Ms B. Moynihan-Cronin: Information on Breeda Moynihan-Cronin Zoom on Breeda Moynihan-Cronin Why were lies told?

Dr. McDaid: Information on James McDaid Zoom on James McDaid The Torc Hotel has closed and the board does not intend to reopen it. The board decided last week to offer the Torc for sale by public tender in the near future. The Great Southern Hotels group is committed to accommodating the staff of the Torc either at the old hotel in Killarney or with an agreed voluntary redundancy package. The sale of the Torc will complete the group's strategy for its Kerry portfolio and ensures that borrowing for capital investment purposes remains at an acceptable level. The board of Aer Rianta accepted the proposals of the board of Great Southern Hotels and fully endorsed the strategy. There are no proposals at this time for the sale of any other hotel in the Great Southern Hotels chain.

Planned investment by the Great Southern Hotels group over the next five years will amount to approximately €33 million. In a strategic review undertaken for the Minister's predecessor in 1999, the board of Aer Rianta considered that the Great Southern Hotels group, while operating successfully, is not central to Aer Rianta's airport management operations. The board recommended that it should exit the hotel sector and use the proceeds of the sale to [140] finance capital expenditure programmes at the State airports. A report prepared by Warburg Dillon Read and AIB Capital Markets for the former Minister agreed with the view of the Aer Rianta board on this matter. The Minister for Transport has indicated that he will revisit the question of the future of the Great Southern Hotels group in due course. He stated, however, that he intends to concentrate for the time being on the priority issues for aviation, and transport in general, as set out in An Agreed Programme for Government.

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