Interest bill pushes improving Jurys Inn into loss

Irish budget hotel chain Jurys Inn reduced its losses in 2012 after recording a third successive year of revenue and earnings growth.

Vesway Ltd and Subsidiaries, which operates Jurys Inn and reports its numbers in sterling, made a loss of £6.5 million in 2012 compared with £31.7 million a year earlier.

Revenue rose by 3.8 per cent to £153 million, the third year running that the chain’s turnover has increased. Earnings before interest, tax, depreciation and amortisation rose 1.9 per cent to £34 million.

The chain, which comprises 32 hotels in Ireland, Britain and the Czech Republic, saw its operating profit rise to £25 million last year from £3.1 million in 2011. This was largely due to the reversal of £19.1 million of previous impairments on tangible assets.

However, an interest charge of £31.5 million pushed the company into the red.

The high interest payments were a legacy of the €1.166 billion sale of Jurys Inn in 2007 by the then Jurys Doyle group to a consortium of investors led by Quinlan Private, then headed by financier Derek Quinlan.

Last month, Jurys Inn completed a major refinancing of its loans, which reduced its gross debt of £650.8 million by £410 million. This involved its lenders – Irish Bank Resolution Corporation, AIB and Ulster Bank – taking a haircut of £300 million on their loans.

In its accounts, the company’s directors said they were satisfied that this new long-term funding would be “sufficient” to finance the group’s operations, including its growth plans, over the foreseeable future.

Jurys Inn shareholders now comprise the Oman Investment Fund; US-based investment group Mount Kellett Capital Management LP in partnership with Dublin-based Avestus Capital Partners; Ulster Bank; and Westmont Hospitality Group, one of North America's biggest privately-owned specialist hotel investors.

Mount Kellett, Ulster Bank and Westmont Hospitality are new shareholders. The financial restructuring is for a five-year period at “comparable rates” to the previous borrowings.

The refinancing received clearance from the Competition Authority last week.

Commenting on the results performance, John Brennan, chief executive of Jurys Inn Hotel Group, said: "We are very pleased with our trading performance in 2012 which marked a third consecutive year of revenue and profit growth.

“On the back of our recent successful financial restructuring, Jurys Inn is now in a great position to capitalise on future opportunities in the hospitality sector.”

The accounts state that trading is likely to “remain challenging” in 2013 and show that Jurys Inn is currently undertaking a £25 million refurbishment and renovation of its estate out to 2014. This includes a 150-room extension to its Islington hotel in London, which will bring the total number of rooms in the group to 7,681.

In his statement in the 2012 account, Jurys Inn chairman Brian Collie said the British market contracted last year as a result of "weak demand" although the Olympic Games provided a "much-needed boost" to the London market.

Ireland “improved” although “ongoing austerity and weak consumer sentiment” created challenges for the hotel sector.