Hotels in Northern Ireland enjoy bumper decade
Most of the hotels trading in Northern Ireland are trading profitably. The locally owned hotels are enjoying nearly a decade of increased business turnover, although performances have varied significantly.
In an attempt to make an overall assessment of the recent performance of locally owned hotels, a snapshot comparison has been compiled using data from the published accounts for the trading year ending in 2010 as a baseline. This serves only to give an overview which takes no account of particular features affecting individual companies. Any chosen baseline will produce results that are particularly influenced by that choice of year.
Key information has been examined for 13 groups. Six of the 13 sets of results are a group of businesses with consolidated results. Hastings Hotels includes the Europa, Stormont, Culloden, Slieve Donard and Ballygalley Castle hotels. The new Grand Central will be added next year. Andras House brings together the Crown Plaza, Days Hotel, the Holiday Inn and IBIS. Tullymore House includes Galgorm Manor. Beannchor No.1 is the owner of the Merchant Hotel as well as the Bullitt and several hostelries. Craigantlet Farm owns La Mon Hotel as part of a group. The McKeever Group includes Corrs Corner, the Dunsilly Hotel and the Adair Arms as well as (in future) the Dunadry Hotel.
There are no published trading figures for externally owned hotels such as the Radisson, Jury's, Hilton, Titanic and Clayton Hotels. Many smaller locally owned hotels have trading results which are below the levels requiring disclosure.
The comparative figures for the larger local hotels draw on the latest accounts, usually for years ending in 2017 or 2018. Several of the groups are currently investing in extra capacity or are at an early stage of benefiting from a recent investment programme.
This comparative information may help to assess how well each of these 13 groups has been performing. Any suggestion of a definitive league table should be treated with caution. However, with the risk of some bias by not emphasising special factors affecting each of these businesses, there seem to be three general features.
First, all these hotel groups are trading profitably, albeit some with tighter margins. Operating profits may not be a good (or the best) indicator of performance where the businesses is relying on differing levels of borrowed funds which means that pre-tax profits are not ranked in the same order as operating profits.
Second, in the last decade, the big turnover increases have been in the Belfast region and in Ballymena and the north west. Improvements in profits have been correlated with the changes in turnover.
Third, whilst employment has been increasing, there has been some surprising divergence in the relationship of job numbers to turnover.
Since there has been a large increase in the number of hotels and the number of hotel bedrooms in the last four years, there is still an increase in trading capacity which has not yet been reflected in the overall financial figures. For the groups currently expanding their market capacity, there may be an expectation of further profit improvements, so long as the local market does not become over-supplied relative to the growth in demand for accommodation.
Company report: Lagan Construction
Lagan Construction International Holdings is a Northern Ireland-registered company which is now a subsidiary of an Isle of Man-registered company, Lagan Specialist Contracts Group Holdings.
The group describes its main activities as airport infrastructure works, buildings, design and construction of airside civil engineering projects whilst offering fully integrated solutions for international clients.
Lagan Construction International Holdings is a major part of the former larger group of Lagan businesses where Kevin Anthony Lagan is a major shareholder.
It consolidates the results for over 12 trading businesses.
This business continues to trade profitably. Annual turnover in 2017-18 increased by 4%, to reach over £83m.
Operating profits were, however, affected by a large single exceptional item costing £5.4m.
This is attributed in the annual report to costs in relation to bond provisions of £4.8m as well as a write-off of intercompany debts of £0.6m.
Pre-tax profits which increased to £6.4m in 2016-17 fell to £4.6m in 2017-18 after the extra cost of £5.4m was deducted from trading profits.
Employment in the group increased recently to reach 127 people. No dividends were allocated to shareholders.
The annual report says that the group expects the economic environment in which it operates to remain positive in the next 12 months, but adds a caution on the future impact of Brexit.
A working group has been formed to look at the implications, risks and challenges that Brexit may bring and to minimise any adverse impact.