So here is the solution.
There was nothing wrong with my script. The issue was that the host was added via one of the monitoring wizards and the it made the rather big assumption to use the name of the host as it's address. The monitored server is not publicly accessible and there is no internal DNS server so the Nagios server can't resolve it to an IP address.
I had to manually change each servers address to its IP.
I'm not sure if Nagios made this assumption to use the hostname or it was a configuration oversight on our end.