Fitzpatrick Hotels profit and revenue fall despite record occupancy
Lower room rates in New York hotels follow addition of 6,000 hotel bedrooms in city
The Fitzpatrick Manhattan Hotel in New York. The two Manhattan hotels owned by John Fitzpatrick achieved a record average occupancy level of 91 per cent last year.
The two New York hotels owned by Irishman John Fitzpatrick achieved record occupancy levels last year but profits and revenue declined as the company was forced to lower its rates as 6,000 new hotel bedrooms were added in the city.
Latest accounts for Fitzpatrick Hotels Ltd for the year to the end of September 2016 show that its turnover declined by 2.5 per cent to $25.8 million while its pretax profit fell by 16 per cent to $2.3 million.
The two Manhattan hotels achieved a record average occupancy level of 91 per cent but had to lower their room rates (from an average $285 to $270 night) as competition from new hotels and about 40,000 Airbnb units impacted the market.
The hotel group was also hit by increased labour costs and property taxes. Its wages and salaries bill rose by 3 per cent to just more than $11 million.
Net cash generated from its operating activities was robust at $3.1 million, resulting in cash on hand at the end of the year of $7.7 million.
Mr Fitzpatrick said the group was budgeting for a modest increase in profit in the current financial year, as the supply of new hotel rooms tapers off – about 800 additional bedrooms are expected to be added in New York this year.
The total number of hotel rooms in the city has increased to 116,000 from 85,000 in 2009. The number of visitors to New York over the same period has risen to 50.3 million from 44.5 million.
Mr Fitzpatrick expects a similar occupancy level as in 2016. “The hotels are as busy as ever but our room rates are down,” he told The Irish Times. “I think it will be another year before we see a turnaround in that trend.”
Mr Fitzpatrick said business from the UK was holding up in spite of the decline in the value of sterling following the Brexit vote, while the number of visitors from China was increasing with the company picking up a number of accounts with Chinese financial institutions.
Visitors from China currently account for about 2 per cent of the hotel group’s business.
“In terms of Ireland, we’re beginning to see the numbers coming back [after recession and austerity], particularly families, and they seem to be doing more than one city in the US.”
Overall, Mr Fitzpatrick said he was pleased with the performance of the group, which was in line with the New York market and above average against its direct peers.
The company closed the year with net assets of $42.8 million. Its land and buildings had a net book value of $67.8 million while the level of bank loans reduced by $1.2 million to $38.4 million.
The Fitzpatrick accounts also show that directors’ remuneration rose by 23 per cent to $1.3 million. The company paid a dividend during the year of $218,000, down from $240,000 in 2015.
The group also continues to invest in upgrading its two properties. Some $200,000 has been spent on the brickwork at its Grand Central hotel, while Mr Fitzpatrick is planning to replace the furniture at its Manhattan property.