Just hours after the Government announced that the hospitality sector’s special 9 per cent VAT rate had been extended until the end of August, US real estate investment group Kennedy Wilson published its full-year results detailing the significant rebound in business last year at the five-star Shelbourne Hotel in Dublin, which it owns.
The Shelbourne’s revenues totalled $46.9 million (€44 million) in the 12 months to the end of December 2022, the filings show (the figures are reported in dollars as Kennedy Wilson is an American company). That was almost treble the $17.1 million it booked for the previous year, when it was subject to more extensive Covid-19 lockdown restrictions. In the fourth quarter, it logged revenue of $13.7 million, up from $7.9 million a year earlier.
On the expenses side of the equation, the Shelbourne’s costs more than doubled last year to $29.5 million from $12.7 million in 2021. In the fourth quarter, its costs ran to $9 million, up from $4.9 million a year earlier.
So that gave it an operating surplus for the year of $17.4 million versus $4.4 million in 2021.
The Shelbourne’s average room rate last year was $421.3 or €391.53 using its own estimated foreign exchange rate for the period. ln 2021 the average rate was $358.7 or €315.66 using the company’s exchange rate. In euro terms that’s a healthy 19.4 per cent increase in the average rate for its 265 luxury rooms.
The Covid effect has to be factored into the equation when assessing the results but the figures do provide clear evidence that the Shelbourne doesn’t need the crutch of a lower VAT rate to trade successfully this summer. Not that Kennedy Wilson will object to the Government’s decision to fatten its margin, of course.
The Department of Finance’s own officials have long argued against retaining the tax break, along with leading think tanks and many economic commentators. Some politicians have accused the industry of price gouging, including junior minister Niall Collins of Fianna Fáil.
So why has the Government caved again in the face of fierce lobbying by the industry? And what odds on it being extended again post August?
