Mary Hanafin (Dún Laoghaire, Fianna Fail)

Economic circumstances are making trading conditions difficult for most businesses at present. These difficult conditions are exacerbated in the case of the hotel sector by the build up of an overcapacity in the availability of rooms in recent years. This is proving to be a complex situation to resolve and I believe that, inevitably, it will require a market-led solution over time.

I had the opportunity earlier this week to have a useful exchange of views with the chairman, the chief executive and other senior executives of NAMA on how their operations may impact on the hotel and overall tourism sectors. I was accompanied at the discussions by senior officials of my Department and Fáilte Ireland. I should stress that the engagement with NAMA was at an overall policy level and was not related to any specific enterprise or borrower.

In order to inform the discussion, Fáilte Ireland had prepared in advance a detailed market analysis which assesses recent supply and demand in the hotel sector in Ireland and examines the possibility of recovery in the medium term. This analysis was prepared in consultation with the Irish Hotels Federation and will be made public over the coming weeks.

At the meeting, I voiced my overall concern that there would be a sufficient range and geographical spread of hotels to cater for present and projected tourism demand. I referred to the significant employment levels in the tourism and hotel sector and the importance of sustaining such jobs. I also referred to the IHF's concern that the apparent actions of some banks in sustaining non-viable hotels could have the effect of squeezing out some well-established family-run operations. I encouraged NAMA to be strategic in its approach and I welcomed its willingness to keep in contact with the Department and the tourism agencies at a general policy level as it worked its way through the management of its hotel-backed loans portfolio.

For its part, NAMA indicated that it had completed the transfer of a number of tranches of loans, which included 35 Irish-based hotels, and had begun its engagement with borrowers in relation to business plans on a case by case basis.

NAMA expects that its portfolio of hotel backed loans will increase further, although not as much as anticipated publicly. I was pleased to be advised that NAMA has not subsidised loss making hotels nor does it intend to do so. It accepted the need to adjust to the new market realities and has already met the IHF to allay concerns that it may be acting in an uncompetitive manner or as a monopoly hotel player. It welcomed the receipt of Fáilte Ireland's analysis of the sector and I am pleased to say it is open to taking account of overall tourism policy considerations as its own strategy evolves.

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