One of the country’s best known five-star hotels, Dromoland Castle, has lost out on an estimated €400,000 in Christmas party income alongside its sister hotel in recent days.
According to chief financial officer at Dromoland Castle Joe Hughes, Christmas party cancellations for Dromoland Castle and neighbouring The Inn at Dromoland have come due to the current surge in Covid-19 cases and comments made by the chief medical officer Dr Tony Holohan this week.
Dr Holohan said cancelling plans to socialise in the run-up to Christmas would be the “responsible decision”, with up to 200,000 preventable infections forecast for the month of December.
On Friday, Dromoland Castle's Mr Hughes said: “Prior to the CMO’s comments, some companies had already cancelled their proposed gatherings but the formal announcement crystallised smaller party group cancellations within 24 hours."
He said “the estimated total revenue shortfall would be around €400,000 on forecast across both hotels.”
Cancellations
Mr Hughes said that around €250,000 of the estimated €400,000 in cancellations had been made for the two Co Clare hotels since Dr Holohan’s comments on Christmas parties earlier this week.
Mr Hughes said: "Many of our colleagues in the industry are seeing substantial levels of Christmas party cancellations in the aftermath of the CMO's announcement."
He confirmed that Dromoland Castle's Christmas residential package for this year is booked out.
He made his comments as new 2020 accounts show that the five-star resort and The Inn at Dromoland last year sustained a €15.7 million or 68.5 per cent revenue hit due to Covid-19 shutdowns.
Revenues decreased from €23 million to €7.23 million in 2020, and the accounts show that Dromoland Castle Holdings Ltd sustained a pre-tax loss of €3.3 million due to the pandemic.
The loss takes account of non-cash deprecation costs of €2.08 million and interest charges of €409,610.
Revenue fall-off
The hotel firm last year received €2.29 million in State Covid-19 wage subsidy scheme payments.
Revenues from rooms declined from €11.74 million to €2.87 million and food and drink revenues declined from €8.9 million to €3 million.
General manager at Dromoland, Mark Nolan, said that the hotel “had a cliff fall-off in revenues last year due to the pandemic.”
However, Mr Nolan said that the biggest challenge for 2022 will be to manage demand.
He said that 2022 “looks very good - it looks too good in spots. At the moment, July is at 73 per cent occupancy already. It will churn, things will come off and come on.”
On the 2021 performance at Dromoland, Mr Hughes said: “We have performed above expectations. We had initially budgeted for moving into positive Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) territory and we have more than exceeded that. Our forecast for the rest of the year is strong.”
Mr Nolan said that last year “we were looking into the abyss, but right now, the road looks a lot better than it was 18 months ago.”
Cash injection
Mr Nolan said that the resort closed on March 19th 2020 due to Covid-19 and at a conference call with the hotel board a week later, the board agreed to raise fresh funds of €5.3 million for the hotel through issuing shares.
Mr Nolan said: “They were over-subscribed which really made a helluva difference to us from a cash point of view.
“It hugely strengthened our balance sheet and we were very strongly positioned coming into the year with an extra €3 million in cash.”
“Whatever blips there were this year, we were in a good position to see them out.”
The €5.3 million cash injection also allowed Dromoland to spend €1.2 million in capital expenditure during the pandemic.
At the end of December last, the company had shareholder funds of €19.8 million.
Numbers employed last year reduced from 401 to 179, and staff costs reduced from €9.66 million to €5.6 million.
