Westin hotel owners write off €21.4m business loan
The owners of Dublin's five-star Westin Hotel, based in a building owned by Treasury Holdings, have been forced to write off a €21.4m loan given to the business.
The hotel, which is losing €4.5m a year, is owned by US group Starwood Hotels, but the property has been loss-making since it opened, accounts for Westin Hotels Ireland state.
In April, Starwood, which describes itself as the "principal provider of finance" to the hotel, waived all rights to repayment of loans worth €21.4m, plus accrued interest of €2.5m. The balance sheet of the company shows accumulated losses of €31.3m to the end of 2009.
"It  was a difficult year for the hospitality industry with average rates in decline, which represents a serious threat to profitability," state the accounts.
Cost-cutting and revenue raising efforts should help the hotel become profitable in the future, the company maintains.
While the losses are steep for a Dublin hotel, the Starwood group has deep financial pockets, with 979 hotels worldwide either owned or franchised out.
The hotel property, near Trinity College Dublin, is on lease with Treasury until 2026 under a complex rental agreement. Depending on an "annual repayment schedule", lease payments can range anywhere from €1.3m to €5m. At the end of 2009, the hotel was facing lease payments of €4.6m within the next year.
The profit and loss account shows sales dropping from €15m to €11.5m, with expenses and costs wiping out a gross profit of €5.1m. The auditors to the company were Ernst & Young, who signed off on the accounts just before Christmas.
Many hotels around the country are loss-making at present, with numerous insolvent too. Many in the industry are worried that NAMA will subsidise loss-making hotels, but this has been denied by Tourism Minister Mary Hanafin.
Late last year, the minister said NAMA would "not depress the market by selling them off immediately".