Gresham losses close to €400,000

GRESHAM Hotels Group has endured another tough trading period, incurring losses short of €400,000 for the first six months’ trading period from January to June 2003.

That compares with losses of €958,000 in the February to July 2002 six months.

On a like-for-like basis, the results under review would have been more than 250,000 better, said chief executive Patrick Coyle.

However, that message appeared not to reach the markets in time and the shares fell by nearly 6% or 5c to 84c on the day. The full-year results will be minus the Ryan Hotels sold off for €35 million and the impact on turnover will be about €7m.

The sale should be earnings-enhancing, however, given that €2.1m in costs is directly attributable to the distribution costs of keeping those hotels functioning.

Turnover for the period fell from €26.8 million to €25.2m, reflecting the tough economic climate.

It was affected by the war in Iraq and the SARS epidemic.

Occupancy for the period matched last year’s at 73%, while the average room rate was down marginally from 83 to 82.

Ireland performed well for the group, with some growth achieved, but the important US market declined further, while the British market was flat.

Overall, while visibility on the sector is still poor, Mr Coyle said the current outlook was more positive overall, with inquiries for Gresham Dublin for 2004 very good.

Minus the Ryan hotels, Gresham Group is left with seven hotels in five countries, including three in Ireland and one each in Britain, Holland, Germany and Belgium.

To bring the group up to critical mass, Mr Coyle said it would need between 15 and 20 hotels to bring it to that operational level. For the group, the way forward will be to cluster hotels in the major cities. But it was not a foregone conclusion that all of the development would be in existing markets.

There were “no plans” to exit any of the current countries where the group is active, he said. Selling off the Ryan stable set the group up for a more coherent strategy going forward.

The plan is to focus operations on city centre locations, with an emphasis on bedrooms and meeting facilities.

The sale of the Ryan Hotels and the cost reductions that they bring “places the group in a very strong financial position and creates the necessary flexibility to enable us execute our future growth strategy,” said Mr Coyle.

Due to the uncertainty still prevailing, the group has decided not to pay an interim dividend.

The board in its statement said: “It is felt appropriate to defer the decision on the level of dividend until such time as the outcome for the full year is known.”