Five-star hotel sustains €3.6m loss despite record occupancy levels

The five-star Westin Hotel on Dublin’s College Green sustained a pre-tax loss of €3.59m last year despite recording the highest room occupancy levels since the hotel opened.

Accounts filed with the Companies Registration Office show revenues at Westin Hotels Ireland Ltd increased by 11%, from €10.59m to €11.8m, in the 12 months to the end of Dec 2011.

The 163-bedroom hotel, located opposite Trinity College, was built and is owned by Johnny Ronan and Richard Barrett’s Treasury Holdings.

The directors’ report states: “In 2011, occupancy and average rate improved on the back of three years of decline in the daily rate.

“While occupancy is the highest since the hotel opened, the average rate is way behind the peak year 2007.

“While the market has shown evidence of signs of recovery, it remains highly price sensitive and unpredictable and most importantly lagging significantly behind 2007 levels.

“The company directors are satisfied that the management has implemented stringent cost containment measures.”

In 2010, the hotel firm recorded a pre-tax profit of €19.6m, but this occurred only after its owners, the US-based Starwood Hotels and Resorts, “forgave” the €24m it had invested in the business.

The hotel chain was owed €21.4m in loans and €2.5m in interest by the Dublin hotel, but waived all rights to be repaid in 2010, resulting in the profit.

The numbers employed by the hotel last year fell from 114 to 105. Staff costs increased from €4.8m to €5.2m, and emoluments to directors increased from €155,872 to €259,844.

The loss last year takes account of non-cash depreciation cost of €457,104. Cost of sales increased from €5.8m to €6.2m, with operating expenses increasing from €8.6m to €8.8m.

The firm recorded an operating loss of €3.3m last year and interest payments totalling €287,008.

Annual lease obligations to Treasury Holdings for 2011 totalled €4.7m. The agreement commenced in 2001 and runs for 25 years. A note states: “Minimum lease payments are paid to an escalating annual repayment schedule ranging from €1.3m to €5m.”

The figures show the firm owed €10m in accruals at the end of December with €9.2m relating to deferred operating lease rentals.

The loss last year resulted in accumulated losses climbing to €15.3m. The firm received a €4.3m loan from Starwood International Finance Europe in 2011.

A note attached to the accounts states that “Starwood Hotels and Resorts Worldwide, the company’s ultimate parent undertaking, have undertaken to provide the company with financial support to enable it to continue operating and to discharge its obligations to all creditors, both current and future for a period of at least 12 months”.