John Fitzpatrick’s New York hotels earn $2.3m after tax

The two New York hotels owned by Irishman John Fitzpatrick made a combined after-tax profit of $2.3 million (€2.03 million) last year, a period when the group achieved a record occupancy rate of 91 per cent.

Latest accounts for Fitzpatrick Hotels Ltd show its turnover rose by 1.2 per cent to $26.55 million in the year to the end of September 2015.

This was due in large part to increased food and beverage revenue at its popular Wheeltapper bar and restaurant, located in the four-star Fitzpatrick Grand Central Hotel.

Situated opposite the busy Grand Central rail terminal, this bar has a heated outdoor patio area, something of a rarity in Manhattan, and generated revenues last year of about $4.5 million. "It's really the after-work crowd that is driving that business," Mr Fitzpatrick told The Irish Times yesterday. "It's been a great success."

After four years of operating profit growth averaging 20 per cent annually, it declined last year to just under $5.1 million from $5.7 million in the previous reporting period.

This was due to lower room rates, increased union labour costs, substantial property taxes and interest expenses, Mr Fitzpatrick said.

The company’s average room rate declined by 1 per cent against a backdrop of 11,000 new hotel rooms being built in New York, the strength of the dollar negatively impacting on international travel to the city, and the proliferation of illegal hotel rooms in the area.

Ongoing upgrade

Mr Fitzpatrick is completing a $2 million refurbishment of his hotels, to include new furnishings in its four-star Fitzpatrick Manhattan property, having already upgraded in-room televisions and wifi internet systems.

This will be followed in 2017 by a $750,000 upgrade of the 155 bedrooms in his Grand Central hotel.

Commenting on current trading, Mr Fitzpatrick said: “We will continue with record occupancy levels but there will be a decline in room rates of 3-4 per cent due to the increase in new [hotel] rooms in New York. I see this being a trend for the next two years.

“But we’re very confident about the future. So much so that we continue with our $2 million upgrade of both hotels. And next year we’ll begin the renovations of bathrooms in Grand Central.”

Visitors from the UK make up about 10 per cent of the hotel group’s business but Mr Fitzpatrick said he has seen no evidence of a decline in this business due to the Brexit vote.

“We don’t see any sign of a downturn in business from the UK at the moment,” he said. “For sure, the strength of the dollar has affected our business slightly but New York is still a major destination and a great place to visit.”

The Fitzpatrick group employed an average 158 employees last year with wages and salaries coming to $10.7 million. Directors’ fees and emoluments remained unchanged at just more than $1 million.

The net book value of its freehold land and buildings was unchanged at $67.8 million while shareholders’ funds rose by 5 per cent to $44.1 million.

Interest charges rose during the year to $2.3 million from $1.5 million, while its net debt shrank to $33 million from $34.4 million in 2014.

The accounts show Mr Fitzpatrick received a dividend from the company last year of $240,000. No dividend was paid in the previous year.