'Orderly disposal' of Great Southern best option - Ahern

Taoiseach Bertie Ahern indicated that the sale of the State-owned Great Southern Hotels chain had the backing of the Government. The reality, he said, was that the hotels were not going where they needed to go.

"The Government assessment is that the orderly disposal of the hotels as a going concern offers the best opportunity for them to reach full potential in a niche market to which they are best suited. This will enable hotels to contribute to tourism in the community. The Great Southern Hotel group has engaged advisers to assist in the orderly disposal. The Minister will meet staff interests in the next few days to discuss how we can assist in this process."

Labour leader Pat Rabbitte said the hotels had been "passed from Billy to Jack" in recent years. The contribution they had made to the training of high skilled staff was, at one stage, more than the contribution made by the rest of the hotel sector.

He said he had been contacted by people in Killarney, not all of whom were of his particular persuasion, to remind him that Minister for Arts, Sport and Tourism John O'Donoghue had pledged before the election that the hotels would not be sold.

"The accumulated losses in this case are €6 million. Let it be remembered that, contrary to the impression being put about, these hotels never got State subvention, except at one stage in the 1980s when the State debt needed to be cleared, largely taxes due to the State at the time."

Mr Ahern said the group's debts had been cleared in the 1980s and the group was given a clean bill of health. Breeda Moynihan-Cronin (Labour, Kerry South) interjected: "It was starved of investment."

Mr Ahern said that in the late 1980s-early 1990s the group got the go-ahead to redevelop a number of hotels. It then set up new hotels, including the Great Southern Hotel at the airport, now the flagship hotel. Permission was given to invest in the Derry and Cork hotels and to refurbish the Corrib, Eyre Square, Parknasilla and Killarney hotels.

"Despite these efforts, the group has continued to have trading difficulties. Accumulated debt is €40 million and rising. The Corrib, Galway and Rosslare hotels represent a serious strain on the group and only the airport hotel is operating with reasonable success. Even in this hotel, wage costs are uncompetitive and the classic hotels of Parknasilla, Killarney and Eyre Square need major capital investment and retrenchment."

Mr Ahern said there had been difficulties for several years, and he had been speaking with staff, management and unions.

Mr Rabbitte warned that, if sold, some hotels would be developed for property speculation, for which they were ideal sites, as opposed to being an element of the tourism infrastructure that dispersed tourism around the country to areas that would otherwise suffer.

He was amazed, he said, "the Minister for Arts, Sport and Tourism can facilitate this and that the Fianna Fáil party can be dictated to by the Progressive Democrats". He accused Minister for the Gaeltacht Éamon Ó Cuív of "running around and speaking from both sides of his mouth" on the issue.

Mr Ahern said the group had every opportunity over the past 20 years and the support of various governments. He said he hoped most of the hotels would continue to be hotels, as he had always thought they had much potential.