Travelodge Ireland arm back in the black after revamp
THE company behind the Travelodge hotel arm in Ireland says it is "far better equipped" now to deal with the worst contraction in the hotel sector "in living memory" after completely overhauling its business.
The firm, Smorgs (Ireland), also managed to return to the black in its last financial year, posting a €20,000 operating profit after being in the red to the tune of €1.7m a year earlier.
The business is controlled by Richard O'Sullivan and Seamus McGowan, both of whom were at one stage with the Jurys Doyle group.
They purchased the Travelodge franchise for Ireland in 2004. Stan Cooney is also an investor in the business.
Earlier this year, Smorgs took a lease on the Mercer Hotel near St Stephen's Green in Dublin, giving it its first hotel in the city centre. The Mercer is owned by the Royal College of Surgeons, and was developed as part of a chain hotels that was linked to developer Bernard McNamara.
The directors of Smorgs say that trade at the Mercer hotel has been "very encouraging", with profitability at the property in the first four months of its operation "well ahead of expectations".
The company also entered into a revised agreement with the owners of two hotels in Limerick that it operates.
Smorgs (Ireland) has agreed to pay the owners the operating profit earned by the two hotels in each month as rent, in lieu of the original amounts set out in the lease agreement.
Those hotel properties – Travelodge Castletroy and Travelodge Ennis Road – were part-owned and owned respectively by Cracken Properties. NAMA appointed a receiver to Cracken Properties this year. Cracken was controlled by Limerick businessmen John Shee and Joe Hanrahan.
The latest set of accounts just filed with the Companies Office show that gross profit at Smorgs (Ireland) for the 12 months to the end of March was just over €7m.
That compared with €8.9m in the 15-month period to the end of March 2011. It also shows that an equity dividend of €15m was paid in the financial year.
The company's directors say that all Smorg's Dublin properties have traded ahead of levels achieved in 2011.
"There is enough anecdotal evidence as well as a stronger booking base to indicate this trend will continue well in to 2013," they note.
"Provincial properties are still struggling with a lacklustre economy, but all are earning an operating profit and we believe will outperform 2011."