Driving past the Kingsley Hotel in Cork on the “Straight Road” as the locals call it, it’s really sad to see the place still shut and sadder again to know that it is now in the hands of the Receiver along with it’s sister hotel the Midleton Park.
The Kingsley Hotel was originally opened in 1998 on the site of the old public baths (I used hate going there as a kid!) by Thomas McCarthy and Thomas Kelly, two experienced hoteliers.
Dreaming big and with the help of willing lenders, this business duo transformed the then successful hotel in 2003 into a large five star hotel with over 130 bedrooms, suites and a separate luxury apartment development called The Residence.
We passed the hotel on a regular basis as the major renovation transformed the existing premises, including the building of an underground car park, which caused some costly delays to the project.
The work seemed to take forever and was eventually completed leaving Cork with a superb large capacity five star hotel. We regularly met clients there for meetings and we also had a few Fuzion brainstorming sessions, which invariably ended up being helped along with a few glasses of vino!
My last memory of the hotel was attending a book launch for Brian O’Connell’s fine publication “Wasted” in one of the superb reception rooms.
The freak Cork floods in November 2009 managed to shut the hotel and unlike all the other business properties affected it has remained unopened, apparently due in part to drawn out and complicated disputes over insurance.
As already mentioned the hotel and it’s sister hotel, which is reported to be trading well have been put into receivership by the bank continuing a trend, which we have witnessed across the length and breadth of the country.
This particular “episode” has been complicated by a freak flood but similar to every other scenario the banks/NAMA have decided that the high level of debt will not be recovered so they move and take over the operation.
Does this course of action and the relavant sums make sense?
- Lend too much to a business on the back of silly (hindsight is a great thing!) property values
- The business can’t sustain the high level of debt during the recession
- A depressed property market puts the whole scenario in the red
- Turf out the existing (experienced?) operators and replace them with high fee receivers and management companies
- Negotiate a sale at a stupid price (watch this space) to an opportunistic investor (the bargain hunters are queuing up to get the best of the rich pickings)
- Chase the individuals unrealistically for the balance of the debt
- Eventually write off the unnecessarily huge level of unpaid debt (taxpayer mops up the difference)
This is the worst, laziest and most costly solution to a very tricky problem and unfortunately it seems to be the most popular course of action being taken.
With the Kingsley example and so many others that we are witnessing on a regular basis, surely it would be better to let proven operators manage the business through this difficult period in a “realistic” manner and let the economy and the property assets recover over time.
Businessmen with Big Dreams are the lifeblood of our economic recovery and the institutions that let these dreams go too far need to stop doing such Bad Sums..
Let’s dream again by having the courage to do Big Sums.