Five-star hotel operators see losses rise threefold to €22.85m

PRE-TAX losses at the hotel group that operates two five-star hotels in Co Kerry increased almost threefold to €22.85 million in 2009.

Killarney Hotels Ltd operates the award-winning five-star The Europe Hotel & Resort and the five-star 102-bedroom Dunloe Castle along with the four-star Hotel Ard na Sidhe.

Last November, the 187-bedroom Europe Hotel & Resort, located at Fossa outside Killarney, was named best overall hotel in the country for the second year running at the National Hospitality awards.

However, accounts recently filed by the Swiss-owned Killarney Hotels Ltd to the Companies’ Office show that the group’s pre-tax losses increased from €8.8m in 2008 to €22.85m to the end of December 2009.

The accounts do not provide a breakdown of each hotel’s financial performance.

The losses increased in spite of the company recording a 5% increase in revenues from €7.5m to €7.9m.

However, the company’s cost of sales increased by 11% from €13.1m to €14.6m during the 12-month period to the end of December 2009.

The chief factor behind the 158% increase in pre-tax losses was a €13m impairment relating to the company’s property.

The figures show that the company recorded an operating loss in 2009 of €9.8m and this followed an operating loss of €8.9m in 2008.

According to the directors’ report, they “consider the performance of the company to be unsatisfactory, although in line with expectation”.

They add: “2009 was again a very challenging year for the hotel industry and the economy at large.

“There has been a worldwide economic downturn with Ireland being amongst the worst hit by it.

“Property values are further declining, consumer confidence is still low and personal consumption is down due to an increased saving rate, all of which has resulted in decreased demands for the hotels.”

The directors state that “although the company made a loss for the financial year of €22.85m, the directors have continued to prepare the statements on a going concern basis as they have received assurances from the company’s parent, Liebherr Hotels AG, that it will provide the company with funds as and when required to enable it to continue trading for the foreseeable future”.

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