Shelbourne Hotel in talks as losses near €400k/month
The luxurious 5-star Shelbourne Hotel is losing almost €400,000 a month. Its owners are now locked in talks with their banks and plan to restructure the huge debts used to buy the high profile venue.
Prominent property developers including Bernard McNamara, David Courtney and Bernard Doyle purchased the property in 2004 and spent millions on its refurbishment, but total losses to date at the hotel top €156m.
The two bankers to Shelbourne Hotel Holdings -- Anglo Irish and Bank of Ireland -- are now in talks with the owners, who are pressing to reduce the scale of the annual loan repayments. Staff costs have been cut to help the hotel move back into profit.
The 262-room venue is a favourite of Dublin's business community, but like many other hotel properties has struggled to move out of the red, with the latest figures showing revenues sliding by 25pc to €22.8m and losses for 2009 of €4.5m. The accounts state that the directors now intend to alter the original loan deal signed with the banks. "Future plans include the directors' intentions to restructure the existing . . . loan facilities."
The directors insist the hotel has seen an improvement in operating profits in 2010 and can prosper despite "the poor economic conditions that prevail".
Mr McNamara, the developer, has been a backer of the hotel with shareholder's loans, but is no longer a director of the company. Apart from Mr Courtney and Mr Doyle, the other director is businessman John Sweeney. The hotel was bought in 2004 for €140m and expensively refurbished. It is now managed on a day-to-day basis by hotel operator Torriam.
The directors value the hotel at €90m but state that the setting up of NAMA has made it difficult to put values on property in the current market.
While the company has total debts and liabilities of €191m and remains loss making, the directors claim to have seen an upturn in performance. "The directors have noted improvements in the trading performance of the hotel,'' they state.
Loans given to the hotel by the banks have expired formally since December 2009, but the directors remain upbeat that long-tern funding can be put in place.
A restructure of bank facilities is now on the cards, the directors reveal. The hotel, meanwhile, will continue to be managed by Torriam, which has a 20-year contract.
"The directors are disappointed with the company's result for the year,'' the accounts state. But they add that its performance is very much in line with the results of other hospitality-based businesses.
Mr Courtney, a director of property consultants Spain Courtney Doyle, was not available to comment yesterday after a message was left at his office.
The loans behind the hotel are not believed to be in NAMA, although the state agency declined to comment last night.