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`zombie' Hotels Arise In Ireland As Recession Empties Rooms

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http://www.bloomberg.com/news/2010-08-30/-zombie-hotels-arise-in-ireland-as-faltering-economy-leaves-rooms-vacant.html

The Glashaus hotel used to be a symbol of the regeneration of one of Dublin’s toughest neighborhoods. Empty and shuttered, it now represents one of the toughest economies Ireland has ever endured.

Developer Liam Carroll opened the boutique hotel in Tallaght in the west of the city three years ago at the height of the country’s decade-long real estate boom. Now, creditors have taken control of much of Carroll’s empire and the Glashaus is closed, as is the nearby 186-room Tallaght Cross Hotel.

“It’s a game of last man standing,” said Paul Gallagher, president of the Irish Hotels Federation in Dublin. “When corporate traffic slowed up and the recession took hold, very quickly it became obvious we had an enormous problem.”

At least 200 hotels opened during Ireland’s decade-long economic boom, leaving a glut of rooms and mountain of debt as the number of visitors dwindles. While some establishments cut their losses and shut, others are lowering prices to stay in business and avoid repaying tax breaks if they were to close.

Irish hotel occupancy slumped to about 54 percent in 2009, the lowest level since the early 1980s, as the economy fell into its worst recession on record, the hotels federation said. In 2007, the height of Ireland’s boom, the figure was 64 percent.

The numbers of trips to Ireland fell 20 percent in the two years through June 2010, the Central Statistics Office said on Aug. 27. Hotels have almost 7 billion euros ($9 billion) in bank borrowings, equivalent to about 111,000 euros per bedroom, according to figures from the industry group.

Debt Burden

Sixty percent of hotel loans at Allied Irish Banks Plc, the country’s second-largest lender, are classed as “criticized,” either closely watched or in trouble, Managing Director Colm Doherty said Aug. 4. Britain’s Lloyds Banking Group Plc, among the biggest lenders to Irish hotels, said this month it’s pulling out of Ireland.

The economy will grow 1 percent this year after contracting about 11 percent in the last two years, Ulster Bank in Dublin forecast on Aug. 26. Unemployment will rise to 13.3 percent this year from 11.8 percent in 2009.

Many hotels that opened as Ireland’s economy tripled in size between 1997 and 2007 were given tax breaks provided they remained open for at least seven years.

Such hotels are slashing prices in a bid to stay open, undermining longer-established venues, said Joe O’Flynn, owner of the Rathsallagh Country House Hotel, south of Dublin.

“It’s a zombie plague,” O’Flynn said. “I can’t compete. If that happens do I join the zombies?”

Wow 111,000 euros of debt per room, and we thought house prices had become overinflated!!!

I wonder what that works out per square foot of a hotel room.

It's the empty room recovery!

Another bubble that's burst.

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thx

And the ^&&*ing Euro. Without it, Ireland could devalue its currency and become a holiday destination again. Note "The numbers of trips to Ireland fell 20 percent in the two years through June 2010"

But they can't and, like Greece, see tourism crash.

"They are being propped up by the banks, which is causing major damage to a lot of the good hotels.”

Just like the housing market, which is propped up by QE and zombie banks

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http://www.bloomberg.com/news/2010-08-30/-zombie-hotels-arise-in-ireland-as-faltering-economy-leaves-rooms-vacant.html

Wow 111,000 euros of debt per room, and we thought house prices had become overinflated!!!

I wonder what that works out per square foot of a hotel room.

It's the empty room recovery!

Another bubble that's burst.

The real killer is the so-called "Zombie Hotels". These have been taken over by the banks, they're being run at cut price rates to service the interest, and they are driving the viable hotels out of business.

So the government owns the banks, and the banks are running businesses. Maybe Bertie Ahern was right when he said he was a socialist, because his legacy is to leave half the businesses in the country directly or indirectly nationalised.

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Interesting how theres no mention of the huge subsidies and tax breaks which led to this crazy hotel building spree

A perfect example of how the governments distort and ultimately ****** up the economy

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anyone remember those adverts on TV at the ragged peak of the boom?

inviting 'investors' to buy a hotel room for something like £235k, for which you'd get to stay in it free 5 nights a year

that's numberwang...

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Interesting how theres no mention of the huge subsidies and tax breaks which led to this crazy hotel building spree

A perfect example of how the governments distort and ultimately ****** up the economy

But it all made sense at the time. You see the guaranteed revenue streams made it all viable...

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"They are being propped up by the banks, which is causing major damage to a lot of the good hotels."

Just like the housing market, which is propped up by QE and zombie banks

My brother's friend owns an old hotel in the west, great reputation. Borrowed to build a new wing, which has been empty for two years. He could do with less subsidised competition!

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http://www.bloomberg.com/news/2010-08-30/-zombie-hotels-arise-in-ireland-as-faltering-economy-leaves-rooms-vacant.html

Wow 111,000 euros of debt per room, and we thought house prices had become overinflated!!!

I wonder what that works out per square foot of a hotel room.

It's the empty room recovery!

Another bubble that's burst.

soon just like on holiday , negotiating a hourly price [ minutely for hpc bears] ;)

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Last time I went over I spent an absolute fortune on [not so good] food and drink - and I almost needed a mortgage for the hire car. No bloody wonder nobody's going there anymore. Seemed to cost about the same as Cannes or Monte Carlo! Only the food is shite and it rains all the time.

It's the 2nd most expensive country in the EU (after Denmark). I remember the good old days where a pint of bitter here was the same price as a pint of Guinness in Donegal. Those days are long gone.

Edited by gruffydd

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You may recall, at the height of the bubble, you could buy a share in a hotel room in certain so-called top hotels around the planet.

nah don't be silly, never happened, bit like speculating on tulip bulb futures... daft, no way

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Last time I went over I spent an absolute fortune on [not so good] food and drink - and I almost needed a mortgage for the hire car. No bloody wonder nobody's going there anymore. Seemed to cost about the same as Cannes or Monte Carlo! Only the food is shite and it rains all the time.

It's the 2nd most expensive country in the EU (after Denmark). I remember the good old days where a pint of bitter here was the same price as a pint of Guinness in Donegal. Those days are long gone.

There a couple of weeks ago.

Walked past McDonalds in outskirts of Dublin - 9 Euro for an angus burger meal. Now that is taking the mick.

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But it all made sense at the time. You see the guaranteed revenue streams made it all viable...

And thats why people should think twice before giving more power to the governments, it never ends well

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anyone remember those adverts on TV at the ragged peak of the boom? inviting 'investors' to buy a hotel room for something like £235k, for which you'd get to stay in it free 5 nights a year

I remember these, and the usual puff-pieces in the MSM. Not heard too much since - but was looking at rugby info and caught this in the NZherald:

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10670420

"About 100 staff at the Westin hotel in Auckland are losing their jobs as most rooms there are shut down.

Receivers of Lighter Quay Hotel Management - the company involved with the Westin Hotel complex - today said the five-star hotel would continue to operate at a reduced capacity. Facilities such as the spa, bar, cafe and conference facilities, along with 77 of the hotel's 170 rooms would remain available, the receivers, KordaMentha, said. KordaMentha said the receivership was the result of failed negotiations between Lighter Quay Hotel Management and its creditors, who included room owners who leased the hotel rooms to Lighter Quay Hotel Management.

Since opening in 2007, the Westin hotel had been popular with locals and domestic and international guests, and was fully booked for the Rugby World Cup, receiver Michael Stiassny said then."

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I looked intio a 7 day break in Ireland recently and opted for Portugal as the Emerald Isle was TFE.*

IMO, their HPI frenzy priced them out of the marketplace accross all sectors. As soon as they dump the Euro they will be on the road to recovery again.

___________________

*Too flippin expensive

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  • 140 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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