Foreclosed G-8 Resort Mirrors Northern Ireland Recession
After Lough Erne Resort was picked to be the center of global politics for two days next year, Jim Treacy should have been getting ready for his greatest moment.
The 58-year-old Northern Irish property developer spent 30 million pounds ($48.2 million) on the complex, where leaders of the Group of Eight countries will gather for their annual talks in 2013. Instead, he will watch on television because Lloyds Banking Group Plc took control of the hotel in 2011.
“I have been done a terrible injustice,” Treacy, who signed top-ranked golfer and Northern Ireland native Rory McIlroy as the hotel’s course touring professional, said on Dec. 11. “But I’m not going to feel bitter about it. I’d like to think I’ll get some recognition for my efforts.”
U.K. Prime Minister David Cameron’s decision last month to host the summit on the 600-acre peninsula in Northern Ireland was designed to showcase the potential of a provincial economy battered by the financial crisis and a re-emergence of violence.
During the past week, loyalists have taken to the streets of Belfast after lawmakers decided to limit the numbers of days the British flag can fly over City Hall. The escalation in sectarian violence this year saw a prison officer killed after dissident republicans fired shots at his car on the main highway running through Northern Ireland on Nov. 1.
“After an excellent year in terms of brand Northern Ireland, with golfing success, and positive image, we are ending the year on a low note,” said Richard Ramsey, chief economist at Ulster Bank Ltd. in Belfast. The G-8 summit is “clearly a positive,” he said.
In some respects, the fate of the five-star hotel reflects the region’s struggles. Born in Fermanagh, Treacy opened the resort in 2007, the same year lawmakers revived a power-sharing assembly following a peace process that began in the 1990s. The economy briefly boomed, with home prices surging before the global financial crisis hit.
Four years later, Lloyds moved to take over the hotel. According to accountancy firm KPMG, which is selling the hotel for 10 million pounds on behalf of Lloyds, the owners weren’t able to meet their debts. Lloyds meanwhile is exiting Ireland after being caught up in Europe’s worst real state crash.
“All the indicators were good,” said Treacy, who has now returned to working in retail. “But like any new business the hotel wasn’t trading enough to pay off the debts.”
Unemployment in Northern Ireland has more than doubled since 2008 to above the U.K. average. House prices have fallen 55 percent, according to Ulster Bank.
Stephen McAloon built 23 houses adjacent to the Lough Erne Hotel and along the same private road world leaders will use next year. In 2010, Allied Irish Banks Plc (ALBK) took control of 19 of the 23 houses he built. None are yet sold.
“I hope they clear the rubble from all the empty houses,” he said as he drove around on his golf cart picking up litter. “It would be a shame to bring all these high-flying politicians to this resort and for them to drive by houses that are lying empty and with tins of paint and rubbish lying across them.”
McAloon said that when building the houses, he expected them to sell for about 250,000 pounds. Now he thinks they will fetch less than 100,000 pounds.
The task of regenerating the region has been made harder by recent outbreaks of violence. Loyalists who want Northern Ireland to remain part of the U.K. began rioting in Belfast on Dec. 3 and a police car was petrol bombed this week.
Some are counting on the G-8 to offer a second chance for the hotel and the wider economy. For Jim Treacy, the event offers hope that he might be able to buy back his hotel. While trading at the resort has been “good,” there have been no offers, said Stuart Irwin, an administrator at KMPG.
“If I got some people to invest me, and the interest this event will generate might help that, then, who knows, I could buy it back,” he said.
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