It looks like the NAMA system set up by Government is having a number of unintended consequences. Accountants and bankers, attracted by tax breaks for building hotel rooms, are now caught with a massive over supply. This has led to room rates at giveaway prices and meals too. Good for the consumer but is it sustainable? We say no, and it needs to change.
Normal traditional hotels, like most of what we have here in Waterford, would not be in such a category but are still stuck with the problem. However, they must suffer because, if one new entrant charges ridiculously low rates, they must follow and all lose money in a situation that endangers their long term viability.
The over supply created by tax breaks should cause people to think. Why not convert some of these to nursing homes? The HSE could also use the buildings for housing patients that find they need more time for rehabilitation and they could be a half way point to full discharge. With the structures of many mental hospitals in deteriorating condition, there could be an option to use surplus hotels following some conversion. The State is lacking major school facilities and children are taught in pre-fab units. Could some of the hotels be reconfigured and used as schools? It is time to think out side the box, as they say.
Some radical ideas are needed as this waste of accommodation and quality building could be put to some creative use. Some empty buildings are being used as community centres as happened in Donegal after a hotel closed up when the builder owners could no longer keep it going.
Builders were using hotel investment as a means of reinvesting profits that would otherwise be paid in tax in some cases. Is the NAMA hotel option right currently? We think not but, if we have an over supply, a change is needed.
We can recall that, in Britain, there was once a thing called ‘unfair trading’ and now we have it in this country in the hotel sector as well as in other businesses where rates are cut just to get cash in the door. This is not good in the long term as jobs and businesses will eventually go.