Losses reduced at Gresham hotels

THE Gresham Hotel Group significantly reduced its pre-tax losses in 2009, with the company saying its hotels have continued to trade well despite the tough economic conditions.

Pre-tax losses were down from €40 million to €6.5m in the year to the end of December 2009.

In July last year the group disposed of The Park Inn in Hyde Park, London and as a result reduced its level of debt by €37m, according to accounts just filed for Precinct Investments Limited, which owns the hotels in Cork and Dublin.

The group is currently funded by two third party banks and an equity shareholder. It said it has been advised by the sole shareholder and both of its third party banks the loans of the group, which are repayable on demand, are being transferred to NAMA.

The effect of the transfer of the group’s debt to NAMA is unclear, the group said, but it said its funding facilities will require successful renegotiation.

“The directors would highlight that the asset disposal formed a central part of the strategic plan of the group to restructure its financing and there is no guarantee that future funding will be available on a commercially acceptable basis or at all,” the accounts read. “The equity shareholder loan amounted to €27m at 31 December, 2009, and it should be noted that this loan is subordinated to group debt.”

The group’s hotels have continued to trade satisfactorily in a “very challenging environment, ahead of their competitive set,” however, the group has incurred “significant losses and cash outflows” due, it said, due to a high level of debt within the company following its privatisation in 2004 and recent asset revaluations.

Turnover in the year to the end of December 2009 fell from €24m to €18.6m.

The Gresham Hotel Group is exposed to price risks associated with the general economic conditions and tourism activity in the countries in which it operates. However management believe this risk is reduced given the geographical spread of its hotels and their long-established presence in the marketplace.

The group said it has policies in place that require appropriate credit checks on potential customers before sales are made. “The group has a mix of long-term and short-term debt finance designed to ensure that the group had sufficient available funds for operations and planned expansions,” the accounts state.

Staff costs in the year amounted to €8.8m, down from €10.7m in the previous year as staff numbers fell from 317 to 272. Redundancy costs in the year amounted to €264,000.

Directors’ remuneration in the year was €210,000, down from €319,000 in the previous year.

Its biggest assets include its hotels on O’Connell Street in Dublin and the Metropole Hotel in Cork.