By Michael Matthews
March 4, 2010 -- Over the past 18 months, all of us have written a litany of sob stories about great hotels and resorts going bust. It has been the subtext of trying to cover lodging in these perilous economic times.

At least on the surface, there are tremendous bargains to be had and you'd assume that some very savvy buyers would move in and pick great hotel properties for pennies on the dollar.

But what if the Federal government stepped in and took over the busted hotels, buying the properties with your tax dollars and then operating them?

Never happen, you say? Well, you must have a very short memory or be a newish business traveler. The federal government did step in after the savings-and-loan crisis of the late 1980s and early 1990s. The U.S. government's Resolution Trust Corporation ended up owning dozens, perhaps hundreds, of hotels for as long as several years.

Well, it's happening again. Not here in America (yet), but in Ireland. The Irish Government last year formed something called the National Asset Management Agency (NAMA) with an initial loan of 16 billion euros. And it looks like NAMA is going to own some of the world's finest five-star hotels and resorts.

According a wonderfully illuminating story by Gretchen Friemann of the Irish Times, The Maybourne Hotel Group, owned by Irish financier Derek Quinlan, may be one of the first hotel groups to fall under the NAMA umbrella. Never heard of Maybourne? Fair enough. But have you heard Claridge's, the Berkeley or the Connaught in London? Of course you have. There are no more grander hotels--and they're part of Quinlan's tottering empire and may soon be owned by NAMA.

NAMA apparently won't stop there, either. Dublin's classic Shelbourne Hotel and the lavish Ritz-Carlton Powerscourt just outside of Dublin will also fall into NAMA's hands as they stagger into receivership, the European version of bankruptcy.

If the Maybourne properties, the Shelbourne, the Ritz-Carlton and several other high-end properties fall into NAMA's orbit, it would make the government-owned fund one of the world's largest luxury hotel operators. Of course, NAMA has absolutely no experience in the hotel industry let alone any management talents at the luxury end of the lodging market.

A spokesperson for the Irish Hotel Federation estimates that as many as 100 hotels, whose debts are currently owed to Irish banks, may ultimately end up in NAMA. Others say that estimate is low. By the time the Irish banks have dumped their toxic hotel assets on NAMA, the number might well reach 200 properties.

Part of the problem is a global glut of hotels, of course. Ireland is particularly overstocked. Two major U.S. brands, Hilton and Marriott, have recently dropped franchise agreements with several famous Irish properties. And John Power of the Irish Hotel Federation claims that "15,000 rooms need to be removed from the sector if quality businesses are to survive."

Incidentally, Quinlan himself has "retired" to Switzerland. But latest filings from Maybourne's parent company show assets of 654 million pounds and debts of 646 million pounds. But that asset valuation is inflated because of the downward spiral of global property values.

Each of the Maybourne hotels recently underwent major renovations and the completion price per room is around $1.5 million. As I explained in a previous column, that kind of investment would require a hotel to charge about $1,500 a night to break even. Not even the venerable Claridge's fetches that sort of nightly rate.

Right now, however, the big issue is whether NAMA, or any government agency, can actually run a luxury property.

"Hotels are not simple assets, they need daily management," says Power. "I don't think NAMA has come to grips with that."

Of course, if developers and financial swashbucklers like Quinlan had hired somebody to explain that to them, Ireland and the world's hotel industry wouldn't be in the tank and wouldn't need government agencies to ride to the "rescue."

ABOUT MICHAEL MATTHEWS Michael Matthews has managed and marketed fine hotels around the world for more than 45 years. He spent 14 years in Hong Kong building the legendary Regent International group. He has also worked with St. Regis, Ritz-Carlton and Rosewood hotels. Matthews is currently based in Arizona. He began writing Do Not Disturb in early 2004.

THE FINE PRINT Joe Brancatelli makes this space available to Michael Matthews in the spirit of free speech and to encourage editorial diversity and the wider discussion of important travel issues. All of the opinions and material in this column are the sole property of Matthews. This column may not be reproduced in any form without the express permission of Michael Matthews.

This column is Copyright 2010 by Michael Matthews. JoeSentMe.com is Copyright 2010 by Joe Brancatelli. All rights reserved.