Jimmy Deenihan (Kerry North, Fine Gael)
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Question 4: To ask the Minister for Tourism; Culture and Sport the progress that has been made regarding the oversupply of hotel accommodation and the difficulty being experienced by the sector as a result of the impact of the National Assets Management Agency; and if she will make a statement on the matter. [36953/10]

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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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.

Jimmy Deenihan (Kerry North, Fine Gael)
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Did the Minister discuss the availability of bank credit in the aftermath of Bank of Scotland's withdrawal? Is she aware that the hotel sector is heavily over-borrowed and is experiencing difficulties in accessing working capital? I ask her to respond to the press release issued today by the Irish Hotels Federation which expresses concern about the inaction of her colleague, the Minister for the Environment, Heritage and Local Government, Deputy Gormley, on excessive local authority charges. The press release states that 180 hotels and guest houses could go out of businesses because of the refusal of county managers under the Minister's direction to negotiate.

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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The relationship with other banks arose during my discussions with NAMA, which has a remit to work with AIB and Bank of Ireland. However, even though it does not have the same relationship with Bank of Scotland and Ulster Bank, these banks are also obliged to lend in a prudent and sustainable manner. I acknowledge that the withdrawal of Bank of Scotland is an issue of considerable concern to hoteliers, particularly in respect of credit availability over the winter months.

I was struck by the fact that fewer hotels than anticipated are going into NAMA. It now appears that it will only control between 60 and 70 hotels. In so far as it has a public policy remit, we can be assured that it will not depress the market by selling them off immediately and it is anxious to take advice on the public policy issue of the range and categories of hotels needed.

In regard to the other banks, I do not know if it would be helpful to engage with the Irish Banking Federation but I am happy to do so.

Jimmy Deenihan (Kerry North, Fine Gael)
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On the positive side, the surplus of bedrooms in this country offers an opportunity for promoting Ireland more aggressively in the UK and elsewhere. Has the Minister encouraged Tourism Ireland to tell the world how cheap and competitive our hotel rates are at present? We have an oversupply of rooms according to Peter Bacon and while perhaps some hotels should be closed, that is not going to happen. Is there a potential for promoting tourism based on our low rates? However, it is not sustainable for hotels that their rates are back to 1999 levels.

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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Hotels have to deal with a number of issues, including surplus capacity. The industry claims to have 15,000 surplus rooms. Based on our plans to attract up to 8 million tourists by 2015, we estimate a somewhat lower figure for oversupply but none the less it is an issue which will have to be addressed and banks will have to be conscious of market demands. The economic affairs Cabinet sub-committee has discussed the issue of rates, particularly in so far as they relate to hotels, and I have impressed upon the Minister for the Environment, Heritage and Local Government the penal nature of these rates for the hotel industry.

There is great potential in the British market, which is our most important source of tourists. We are putting renewed emphasis on the message that we offer better value. That campaign only began this year, however. It is unfortunate that people may be criticising our marketing to Britain this year given that we were charging too much for so long. Fáilte Ireland's success in spreading the message to our domestic market about the great value on offer saved the tourism industry this year and we will see further benefits by next summer. With the co-operation of the House, I intend to attend the World Travel Market in London in November in order to support the marketing of Ireland and highlight the good value we offer to the British market.