McKillen rues rocketing Maybourne hotels profit
The Maybourne hotel group, currently the subject of a bitter dispute between developer Paddy McKillen and the Barclay Brothers, is experiencing a surge in bookings and profits, accounts lodged in the UK show.
This means that whoever gets ultimate control of the chain is likely to see the value of their investment rise substantially, if current trends continue. The three hotels -- the Connaught, Claridges and the Berkeley, have posted record sales of £190m (€218m) for the 18 months to the end of December.
Operating profits almost doubled to £60m as London shrugged off the recession that has hit so many other tourist markets hard. The chain's original backers were AIB, Anglo Irish and Bank of Ireland, with these loans subsequently transferring to NAMA.
The Connaught hotel in Mayfair was the stand-out performer in the group, the accounts reveal. It has undergone an extensive refurbishment that has upgraded the entire property and added extra accommodation and bar space.
The group is now commanding an average room rate of £507, compared to £443 in the previous year. The average room occupancy rate stands at 82pc, up four percentage points on the previous year.
The company, which includes Irish developers Mr McKillen and Derek Quinlan among its shareholders, said strong margins were maintained, with healthy increases in profitability. The business targets wealthy corporate travellers from the US, continental Europe and the Middle East.
Despite the rise in profits, no dividend will be paid.
"The medium-term outlook for London is positive. The group recognises the potential impact of the future increase in the supply of luxury accommodation in London and believes it is well placed to manage such competition,'' state the accounts.
The company has a large debt burden of £604m, but holds sufficient working capital to meet its obligations, the accounts make clear.
The hotel group is now employing 1,188 people, down a small number on the previous year, with wages and salaries coming to €45.6m for the 18 months to December. Directors of the firm took out remuneration of €1.7m, with one unnamed director paid €921,000 during the year.
The accounts cover a period before NAMA sold €800m loans taken out by hotel group to a company controlled by the Barclay brothers, owners of the Telegraph newspaper group, that has triggered a bitter takeover battle.
The loans, which funded the purchase of the hotels in 2005, were given to the Maybourne Group by three Irish banks. Nama acquired the loans at the end of June 2010 from the banks and has since sold them on to Maybourne Finance Ltd, a company set up and controlled by David and Frederick Barclay who have been building a stake in the group.
NAMA's deal with them was a controversial move giving the Barclays control over the bulk of the hotel group's loans and has triggered a court battle for control of the three top London hotels. Mr McKillen, who is the hotel group's biggest shareholder with a 37pc stake, has lodged papers to kickstart an action to stop the Barclays from gaining control of the company.
Speaking to the Irish Independent through a spokesperson recently, the reclusive property developer accused NAMA of behaving like "corporate terrorists" and of acting with "vengeance" towards him by selling the loans to the Barclays behind his back.
He also claims it was a bad deal for Irish taxpayers and has handed the Barclays a once-in- -a-lifetime opportunity to make a killing on the hotels. NAMA said it made a profit on the deal.