Operators of 4-star hotel hopeful cost cuts can reverse loss

THE operators of a four-star Co Clare hotel are confident that appropriate measures can be taken to cut costs for the hotel to remain profitable.

Accounts just filed by Temple Gate Hotel Ltd confirm that the Ennis hotel recorded a pre-tax loss of €340,266 in the 12 months to the end of December last and this followed a loss of €314,186 in 2009.

The directors’ report for the family-owned hotel states that “the losses before tax suffered by the company are a result of the costs incurred in financing the extensive renovations carried out by the hotel during 2008 and 2009”.

The hotel is owned and operated by the Madden family and the report states that the directors “are very focused on costs and cash collection and based on budgets for 2011, would hope to achieve a level of profitability”.

The directors state: “In overall terms, turnover has decreased on the prior year due to the ongoing downturn experienced in the hotel and tourism sector in 2009 and 2010.”

They add: “However, operating expenses have also decreased as the company has implemented cost-cutting measures in order to maintain profitability.

“Budgeted performance is being measured against actual performance on a monthly basis and to date this year, budgeted revenues are being achieved.

“However, the directors are very conscious that the market is very uncertain at the moment and if actual performance deviates from budgeted performance at any stage, the directors are confident that they can take appropriate measures to cut costs to remain profitable.”

The accounts do not provide a turnover figure. However, the company’s gross profit last year decreased by 11% from €2.4 million to €2.1m.

The company recorded an operating loss of €18,207 last year compared to €39,267 operating profit in 2009.

However, the operating profit last year included a non-cash depreciation cost of €260,580. The company’s other operating expense’s reduced from €676,908 to €571,390.

The losses were added to last year by bank interest payments totalling €322,059 resulting in the pre-tax loss of €340,266.

The accounts show that the company has bank loans totalling €8.4m.

Employee levels remained the same in 2010 at 67. Staff costs last year reduced from €1.42m to €1.31m.

The accounts show that Temple Gate Hotel Ltd’s land and buildings had a net book value of €7.5m last year.

Ulster Bank holds a number of items as security: a first legal mortgage over the Temple Gate Hotel, a first legal charge over a site adjacent to the Temple Gate; a debenture providing for a first floating charge over all property, assets and undertaking of the Temple Gate hotel, while AIB holds personal guarantees totalling €192,000.