€1.3m writedown in investments behind hotel’s pre-tax loss of €1.6m

A €1.3 million writedown in investments contributed to high profile hotel, the Mount Errigal, recording a pre-tax loss of €1.6m in 2010, new figures show.

The 140-bedroom hotel in Letterkenny, Co Donegal, is part of the McEniff Cara Hotel group and Mount Errigal Hotel Ltd’s directors report an improved performance in 2011.

The figures show that the company recorded the €1.6m loss after recording a €3.6m loss in 2009.

The chief factor behind the losses was a €1.3m write down in 2010 and this followed a €3.6m writedown in 2009.

The hotel’s gross profit decreased in 2010 from €3.3m to €2.8m with administrative expenses declining from €3.6m to €3m.

This resulted in an operating loss in 2010 of €148,496 and this compared with an operating profit of €48,440 in 2009.

According to the directors’ report, the company incurred the “significant write-down last year” due to falling property prices.

They add: “However, the company had a positive cashflow of €147,717. Although the results and balance sheet may indicate some going concern issues, the company has secured very satisfactory long-term funding from its bank in the current year and this, together with the improved results for 2011 to date, the company expects to return to a positive net asset position in the near future.”

The directors continue: “Despite the current economic downturn, the company has increased turnover and cashflow and reduced costs for 2011.

“With this in mind, the company has placed increased emphasis on further growing profitability through the information provided by monthly management accounts, through cost savings and through greater yields and through a strong marketing campaign.

They state: “This along with the strong brand and with continued banking support should mean that the company will be in a strong position to overcome any problems encountered.”

Numbers employed at the firm reduced from 76 to 72 with staff costs reducing from €1.8m to €1.6m.

Aggregate remuneration for the two directors totalled €86,920.

The company’s bank loans totalled €6.6m at the end of 2010 with a further €3.1m owed to group companies.

Other hotels in the Cara Hotel group include the Grand Canal Hotel and Camden Court hotel in Dublin.