Businessmen stand behind the Merrion
Published 19/08/2010 | 05:00
Businessmen Lochlann Quinn and Martin Naughton have provided a letter of comfort promising their continued support and cash for the loss- making Merrion Hotel in Dublin city centre.
The hotel, a popular haunt with politicians and senior civil servants, is posting an annual loss of €503,603, with turnover tumbling from €16.8m to €13.3m, according to its accounts that have just been filed.
The balance sheet of the hotel, for 2009, shows a shareholder's deficit of €2.4m after losses in 2009 and 2008.
The hotel has managed to reduce its after tax losses from €624,147 to €572,946, but conditions remain difficult for hotels, particularly at the top end of the market.
Mr Naughton and Mr Quinn, both associated with electrical goods group, Glen Dimplex, have large net worths and their support is regarded as crucial for the property, which is situated across the road from government buildings.
"The directors have, since the year end, provided a letter of comfort confirming their support and that sufficient cash will be made available,'' state the accounts of Merrion Hotel.
"In the light of this ... the directors believe it is appropriate for the financial statements to be prepared on a going concern basis,'' they add.
The accounts indicate that staffing has been cut in the year, from 246 to 217, slashing the payroll from €7.5m to €6.1m. The directors have waived all remuneration and the hotel has no plans to make capital investments.
The hotel sector is currently undergoing the toughest time in many decades with huge oversupply and so-called "zombie hotels'' forcing room rates down.
The Government has pledged to get involved in the sector, in order to help hotel owners.
NAMA is expected to take ownership of a large number of properties, but its not clear whether it will close them or allow them to continue trading until outstanding loans are paid down.