Pre-tax losses at five-star hotel fall to €900k as operating profit rises 69%

PRE-TAX losses at the Shelbourne Hotel in Dublin narrowed to over €900,000 in 2010, new figures show.

As a result, accumulated losses at the company that owns the hotel, Shelbourne Hotel Holdings Ltd, stood at €209.3 million at the end of December 2010.

The chief factor behind the accumulated loss is a €155m write-down in the landmark property recorded in 2008.

At the end of December 2010, the company owed €286.3m to its creditors, including bank loans totalling €137m. Net liabilities stood at €191.6m.

The pre-tax loss of €906,570 in 2010 compares to a pre-tax loss of €4.56m in 2009.

Accounts just filed with the Companies Office show that the company increased its operating profit by 69% from €1.86m to €3.1m.

Bank interest payments totalled €4m in 2010 compared to €6.4m in 2009.

The directors state that they are “disappointed” with the company’s result.

A note states: “The hotel’s operators have reported improved operating profits in 2011 despite a fall in turnover for that period. The hotel’s trading performance continues to be profitable and key performance indicators have continued to improve throughout 2011.”

The directors state that they “are optimistic that the operating profit of the hotel will continue despite the poor economic conditions that will prevail”.

Prominent property developers including Bernard McNamara, David Courtney and Bernard Doyle purchased the property for €140m in 2004 and spent millions more on the refurbishment of the 265-room five-star hotel.

Mr Doyle and Mr McNamara are no longer directors, but are two of five shareholders that advanced unsecured interest free loans totalling €42m to the company that remained outstanding at the end of 2010.

The company’s revenues dropped from €22.8m to €22.3m in 2010.

The number of employees fell from 333 to 310 with staff costs declining from €9.4m to €9.1m.

The loss in 2010 takes account of non-cash depreciation cost of €1.32m showing that the company recorded a cash profit of €416,139 in 2010.

The company’s current loan facility expired in December 2009 and since then the loan facility has been an on demand facility.

A note to the accounts states that “the company continues to be dependent on the continuing financial support of the group’s lending institutions and the directors have not been made aware of any potential cessation in its bank facilities.”

The directors state that they acknowledge the difficulties facing the company in relation to future financing in the context of the economy in general, but have concluded that they have a reasonable expectation that the company will have adequate resources to continue in operational existence for the foreseeable future.

The directors value the hotel at €90m after its writedown and that no further adjustment is required.

The hotel, continues to be managed by Marriott International subsidiary, Torriam, which has a 20-year contract.

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