Shelbourne operator receives €1.8m in Covid wage subsidies

The company that manages Dublin’s Shelbourne Hotel under licence from its US owners received €1.8 million in Covid-related Government wage subsidies in 2022 but returned to an operating profit following the lifting of public health restrictions.

Torriam Hotel Operating Company, a subsidiary of Marriott International, manages the hotel on behalf of US real estate group Kennedy Wilson, which bought the five-star hotel in 2014 from the Irish Banking Resolution Corporation.

Accounts filed in Dublin recently show Torriam received more than €1.8 million in wage subsidies in 2022, equivalent to roughly 14 per cent of its total wage bill for the year of close to €13.2 million. The company received more than €5.9 million State grants in 2021 and €4.36 million in 2020 when the hotel was forced to close for periods due to Covid-related restrictions.

Torriam returned a small operating profit of €71,873 last year, its first since the outset of the pandemic. After tax, however, the company lost €42,171 – down from more than €78,000 in 2021 – due to interest obligations related to a €9 million loan from its parent company.

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The Shelbourne operator generated turnover of close to €16 million up from €10.67 million in 2021 as room revenues at the 265-bedroom hotel recovered.

[ Shelbourne Hotel revenues climb as room rates top €426 per day ]

“While RevPAR (revenue generated per available room) recovery in the beginning of 2022 was dampened due to the emergence of COVID-19 variants, we saw strong global RevPAR improvement throughout 2022,” the directors noted a report attached to the accounts. “Global recovery continued across all customer segments, led by robust leisure demand as well as strengthening group demand.”

Torriam’s licence agreement with the Kennedy Wilson subsidiary behind the Shelbourne, KW Shelbourne Ops, is set to run out in 2026.

Accounts filed for KW Shelbourne Ops in July show it recorded an after-tax profit in excess of €6.85 million last year compared to a more than €4 million loss in 2021, due to what the directors called a “substantial increase in turnover” to €45 million from just €14,664,323.

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The notable improvement in trading conditions following the lifting of Covid restrictions in early 2022 was the main driver of the Shelbourne’s performance, the directors said.

“There has been sustained recovery in leisure demand both domestically and internationally since the second quarter of 2022 and as a result the directors remain confident that the company will remain in a strong trading position over the next 12 months,” they said.

That recovery has continued into 2023, according to recent Kennedy Wilson filings in the US. The Shelbourne was the only fully operational hotel in the Kennedy Wilson portfolio in the three months to the end of September, although it recently opened a resort in Hawaii, after a refurbishment.

The group’s hotel revenues jumped by more than 18 per cent, from $14 million (€13.05 million) in the third quarter of 2022 to $16.4 million (€15.3 million) between June and September this year, the peak summer tourism season.

In the first nine months of the year, revenues from its hotel operations climbed to $42.7 million, close to the $46.9 million generated in 2022 with three months to spare.