Losses at Galway hotel company increase by 139%

Pre-tax losses at a four-star Galway hotel built by the developer, Bernard McNamara, more than doubled last year to €504,528.

Mr McNamara, through his firm, Shorelark Ltd, constructed the Galway Radisson Blu hotel and new figures show losses at the firm increased by 139% from €210,267 to €504,528 in the 12 months to the end of December last.

This followed the firm’s gross profit declining from €11.8m to €11.1m last year.

Rezidor Hotels — under the Radisson Blu brand — operate the 272-bedroom hotel on Shorelark’s behalf and last year received from Shorelark €860,237 in management fees and contributions to a Rezidor Hotel Group marketing fund.

Mr McNamara resigned as a director of Shorelark in Feb 2011 — in Jan 2010, Mr McNamara acknowledged he was “broke” and had debts in the region of €1.5bn.

Mr McNamara’s long term business partner, hotelier and developer, Jerry O’Reilly is a shareholder and remains a director of the firm.

A note attached to the accounts states that “the hotel continues to generate operating profits before rent despite the difficult environment facing the hospitality sector. The directors are optimistic that the profitability of the hotel will continue despite the poor economic conditions that continue to prevail”.

The report says: “The adverse change in the economic and financial environment has continued to affect the company.

“The directors continue to closely monitor the operations of the trade and to implement plans to improve the turnover and control of costs to drive the operating profits of the hotel.”

The hotel firm had net liabilities of €10.7m last December and a note attached to the accounts states it “continues to work proactively with its shareholders and Nama”.

Shorelark continues to be dependent on Nama and the directors “are of the opinion that the company will continue the receive the support of Nama to enable it to continue trading”.

Shorelark entered into a 20-year lease with Mr McNamara and Mr O’Reilly in Mar 2001 for the lease of the hotel property.

At year end, Shorelark owed €5m to the Mc-Namara/O’Reilly partnership. The note states: “The rent charged for the year was €2m, and the partnership was charged €271,406 in rent. The partnership waived €2.5m of the rent due under these arrangements for the year ended Dec 31 2011.”

In total, Shorelark owed €7.8m to group undertakings.