How many kicks can the hotel sector take? Last week's announcement by Bank of Scotland Ireland (BoSI) that it was pulling out has left the market in another crisis, given that some industry estimates suggest the bank had more than 20% of hotels on its books. Irish hotels are by their nature seasonal, especially outside Dublin, with most borrowing working capital during the winter and paying that back over the busier summer period.

"There's very little credit available and BoSI was one of the main sources of it for the industry. In other years, the banks would have been diving into that market but now where does the good hotelier go for funding?" said Dermot Curtin, director of the hotels and licensed division of CBRE.

The fear is, with hotels scrambling for new funding when the shutters have come down across the financial institutions, good operators will be struggling within months. "Unilateral withdrawal of these working capital facilities at the end of December would be catastrophic," said Paul Gallagher, president of the Irish Hotels Federation.

Instead, hotels without much of a chance of survival will remain on the books of institutions reluctant to crystallise losses, dragging everybody else down by chopping rates. "Their business plan of keeping unprofitable hotels alive is slowly killing profitable hotels and dragging the whole industry down with them," said one source last week.

Maxx headroom

It was interesting to read the views of Arnotts' new executive chairman Mark Schwartz on the future of Boyers, the department store shop on North Earl Street. Schwarz said it had a lot of potential "but I need to look at it closely and figure out my goals". From the point of view of the banks, which are keeping the entire operation going, and the consumer, it might be best to divest of it while at the same time trying to keep the staff employed.

So who would be interested? Step forward somebody like TK Maxx, the discount designer store, which has been scouting for a location in the north city centre for some time. For TK Maxx the attraction would be a sizeable amount of retail space, relatively low rents, and the fact that there is a large pedestrian throughflow on the street. For the banks, the move would provide certainty of income and help address Arnotts' problems.

If the banks decided to flip on the store with a tenant in situ then an international investor would be far more interested in a building let to TK Maxx than one let to a division of Arnotts. TK Maxx's European division saw profits tumble 76% in the first half of the year but overall group president and CEO Carol Meyrowitz blamed no one but the company. "The miss with TK Maxx was our own doing… The issue began early in spring when we did not transition into warm weather products as well as we could have," she told analysts last week.