McKillen company takes £5m Maybourne management fee

A company controlled by property developer Paddy McKillen earned a management fee of £5 million (€5.6 million) last year from the Maybourne hotel group, according to accounts filed in England.

The financial statements for Coroin, which owns the group comprising the luxury London hotels Claridge’s, the Berkeley and the Connaught, show the payment was made to Dublin company, Hume Street Management Consultants.

Hume Street's directors include Mr McKillen and his long-time associate, Liam Cunningham. Its ultimate ownership is vested in a company in the Isle of Man. It was paid a management fee of £3.5 million the previous year.

Revenues

The Maybourne group is ultimately owned by the Qatari royal family, which took ownership more than two years ago when it bought Mr McKillen’s shares and also a stake that had been owned by the Barclay brothers who own the Telegraph media group.

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Mr McKillen had been in a long-running shareholders dispute with the Barclays over control of Maybourne before the Qataris took control. The Qataris kept him on as an adviser.

Revenues at the group were virtually flat at just over £159 million. Operating profits were down by £5 million but the hotel group’s taxable profits were £9.1 million, up from a loss of £1.4 million the previous year, as the hotel group pared back its borrowing costs following a refinancing of its debts in 2015.

The directors of Coroin said Claridge’s, “a timeless art deco jewel in the heart of Mayfair”, delivered record market share in an increasingly competitive London market. It will open new meeting rooms in 2017.

Revenue growth at Claridge’s slowed significantly in 2016, however, down to 0.5 per cent from 11.6 per cent the previous year.

Another Mayfair property, the Connaught, is renowned for its two-star Michelin restaurant and cocktail bars. Its rate of revenue growth was boosted over the year from 2.9 per cent to 7 per cent.

Property

The group’s other property, the Berkeley in Knightsbridge, is currently in the middle of a multistage redevelopment project. Further suites will be added in the next phase, as well as a redesign of signature suites “with some of the largest outdoor spaces in London”.

The temporary closure of some space at the Berkeley for redevelopment hit its revenue performance, however, with a slowdown in revenue of 9.1 per cent, compared to revenue growth of 1.8 per cent the previous year.

Overall, the Maybourne group’s revenue per available room (a key industry metric) increased by 0.5 per cent.

The Qatari-owned hotels said worldwide geopolitical events would continue to affect the group.

"The medium-term outlook for London is positive," the directors said. "Maybourne management recognises, however, the potential adverse impact of the UK leaving the European Union and continued pressure of the increase in the supply of luxury accommodation in London."

The hotels are valued at £795 million in the accounts.