THE FAMILY-owned Moran hotel chain, which owns the Red Cow hotel and pub, recorded a total loss last year of €101 million, according to accounts just filed.
This was due to hefty interest costs relating to its takeover in 2008 of six Bewley’s hotels and a number of financial charges connected to this deal.
The hotel group was also dragged into the red by a charge relating to a revaluation of its properties and a currency hit connected to its UK business.
Accounts for TS Taverns Ltd show that the 10 hotels in the chain achieved sales of €92.6 million in the 12 months to the end of January 2009 and an operating profit of €31.1 million.
However, the company, which is led by Limerick-born businessman Tom Moran, had to pay €39.3 million in interest costs to finance a loan used to buy the Bewley’s hotels from Bert Allen in 2008.
The deal cost the Moran group about €570 million.
In addition, TS Taverns booked a depreciation charge of €13 million relating to tangible fixed assets. It also took a €26.3 million hit in amortisation costs.
A tax charge of €4.2 million left the hotel group with an after-tax loss for the year of €52 million.
The accounts show that TS Taverns devalued its properties by €32.7 million and recorded a currency charge of €17.2 million.
This left it with total losses for the year of €101 million.
Mr Moran told The Irish Times that he had no regrets about the Bewley’s deal.
“At the time, it was a great deal,” he said. “Even my accountant and the banks thought it was the deal of the century. I thought myself it was a good deal and I still think it was a great deal, but we didn’t see the recession coming. None of us did.
“The potential was enormous. We’ve bought potential.”
Mr Moran has since restructured a significant slice of its loans, a move that has reduced its interest costs this year.
The loan is held with a syndicate of banks comprising AIB, Bank of Ireland, Bank of Scotland (Ireland) and Ulster Bank. Its net debt is €655 million.
“They’ve been very supportive and very co-operative with us,” Mr Moran said. “We’re able to service our interest, which is most important.”
The accounts show that the banks hold a charge over the hotels and lands in Sandyford, Co Dublin, owned by Mr Moran and his wife Sheila.
Based on current projections, Mr Moran said the group would return to profitability in the 12 months to the end of January 2011. “The business model is sound,” he added.
In the current year, its operating profit will be about €5 million lower at €26 million. The company’s revenues remain under pressure as it discounts its room rates to attract customers.
Staff at the chain have agreed to extend their working hours by 10 per cent. This has avoided the need for pay cuts.
The Moran chain comprises six Bewley’s hotel in Ireland and England, the Red Cow in Dublin, the Silver Springs in Cork, and two properties in London.
Mr Moran said all of the hotels are profitable.
