Government reviews future of hotel group

The Government is expected to examine the future of the Great Southern hotels in detail in the next few weeks, raising the prospect of the State-owned group being put on the market, writes Arthur Beesley

The nine hotels could be worth up to €130 million, although a sale process, if initiated, might take a year to conclude. The group is managed by Aer Rianta, which wants to exit the business.

While the Government will run the rule soon over the hotels, its immediate priority in relation to Aer Rianta is to ensure the construction of a new "low-cost" terminal at Dublin Airport before summer next year. Aer Rianta wants to modify its original plan for a new terminal, Pier D, and said yesterday it would seek new planning permission in a fortnight.

The company's chairman, Mr Noel Hanlon, said this week that the hotel business was not a core activity. While any decision would be for the Government to make, he said Aer Rianta's preference was to dispose of the group and use the proceeds for its capital programme.

The sale of the group has been mooted on a number of occasions before, in line with the argument that there was little justification in the State running hotels when there was no shortage of private-sector activity in the area.

Observers believe that is very likely to be the outcome of renewed scrutiny of the business, although there would be uncertainty about the structure of the process. Some believe the airport hotels might be leased to management groups, with Aer Rianta maintaining ownership of the sites.

Moves were made two years ago to sell the group but they were blocked by the Kerry-based Independent TD Mr Jackie Healy Rae.

There has been considerable debate about plans for a "low-cost" terminal, sanctioned by the outgoing Government earlier this year. Aer Rianta initially said it could be built in 2003, but it was not expected to be completed in time for the summer season, the deadline set by the Government. It is thought Aer Rianta has been told that any overshoot would be regarded as very unsatisfactory.

The decision to seek permission for the revised design suggests the the original project has been shelved. Aer Rianta argues the older plan, which has permission, needs improvement, including enhanced security features.