Salter Brothers swing to $50m loss on pandemic revenue plunge
The $1 billion Salter Brothers hotel fund plunged to a $51.5 million after-tax loss in the 2020 financial year after taking a big hit from the temporary closure of its hotels during the pandemic, its latest full-year accounts show.
The fund, owns and operates six hotels, including the flagship five-star Intercontinental Melbourne next to the Rialto Tower on Collins Street, which has yet to reopen since closing its doors last year.
Its other hotels include the Voco Gold Coast and Crowne Plazas in Coogee and Melbourne.
Full-year accounts to June 30 for the Salter Brothers Hotel Company show hotel revenue for the 12 months to June 2020 fell 24 per cent – or $35 million – to $110 million.
The fund registered an after-tax loss of $51.5 million from a profit of $9.8 million in fiscal 2019.
In addition to the impact of COVID-19 on trading, a $19.4 million income tax expense relating to “derecognition of deferred tax assets from prior years”, $11.4 million of transaction costs relating to the 2019 acquisition of the NEXT Hotel property in Brisbane and $16 million of property writedowns contributed to the after-tax loss.
“The operations of the group have been profoundly affected by the impact of the COVID-19 pandemic,” the accounts note.
“The Australian hotel market is currently experiencing reduced demand due to the impact of COVID-19 related lockdowns, which has been the main driver of the decrease in profit compared to the prior year.”
The accounts note the company developed a “detailed COVID-19 action plan in response to the COVID-19 pandemic and corresponding impact on operations”.
This included issuing $33.8 million of stapled securities in June to “be applied to [the] general working capital requirements of the Group” and a $2.7 million raise in August. It also renegotiated certain terms of its $450 million syndicated facility agreement with its lenders.
Pandemic impact ‘overstated’
Salter Brothers managing director Paul Salter said the $51.5m loss in the 2020 financial year overstated the impact of COVID on operating earnings.
“After excluding various non-cash and one-off items (such as transaction costs) there was a surplus of $5.9 million for the 2020 year, which compares to $14.1 million in the prior year,” Mr Salter said.
On Monday, Salter Brothers opened the Hyatt Regency hotel on Brisbane’s Queen Street Mall – the first Hyatt in Brisbane. Hyatt took over as the operator of the former Next Hotel Brisbane, which Salter Brothers acquired for $149 million in 2019 and leased to operator Next Story Group.
“Through a mutual decision with the owners of the hotel, we have agreed to surrender the lease-making way for a new operator, the Hyatt Regency Brisbane,” said Next Story Group.
Mr Salter said the Hyatt deal reflected the increased optimism in the market.
“Of course, the last three months of the financial year had a significant impact on the business, as it did on all real estate investment trusts,” he said.
“Since then we have seen occupancy rates turning around as states open up.”
The Brisbane hotel will undergo a refurbishment to enhance the guest rooms, public areas, event spaces and dining venues,
