Hotel operator Centre Island Hotels, owner of the Crowne Plaza Liverpool, insists it is confident about its future despite an auditor warning of ‘material uncertainties’ relating to a banking covenant. Tony McDonough reports
Liverpool-based owner and operator of nine hotels, Centre Island Hotels, says it is “satisfied” the business is a “going concern” despite a second auditor’s warning in two years.
Centre Ireland, which operates three hotels in Liverpool including the waterfront Crowne Plaza, has published its annual accounts for the 12 months to December 31, 2024 on Companies House.
They reveal revenues of almost £36.9m, a fraction below the previous year’s performance. However, pre-tax profits tumbled to £413,996 from just under £2m in 2023. Writing in the annual report Centre Island director Mark Sutton highlighted mitigating factors.
He said during the year the company invested £6.5m in refurbishing the bedrooms in its 312-bedroom Crowne Plaza Birmingham City Centre. This meant multiple rooms were out of action from February to December, reducing earning potential.
Founded in 1995, Centre Island’s first hotel was the Holiday Inn Ellesmere Port. Liverpool’s waterfront Crowne Plaza, one of the most prominent hotels in the city, opened in 1998.
Its other seven hotels are the Holiday Inn Liverpool City Centre, Holiday Inn Express Liverpool Royal Albert Dock, Crowne Plaza Manchester, Holiday Inn Express Manchester, Crowne Plaza Birmingham, Holiday Inn Express Birmingham and Holiday Inn Preston.
On the plus side, the group saw a strong performance in its key corporate accounts market, particularly in Birmingham and Manchester. 2024 saw improvement in the inbound wholesale group market for mainly Asia and India primarily in Manchester.
Liverpool FC’s return to the Champions League saw an improvement in its midweek occupancy and average daily rate. Centre Island noted the improvement compared to when the club was in the Europa League in the previous season. Summer outdoor concerts also boosted occupancy.
Hotels in Ellesmere Port and Preston saw a good performance mainly thanks to hotel guests working in the manufacturing sector.
Mark Sutton said in the report: “Direct costs were controlled well throughout the year, although cost inflation across all areas impacted on the operating gross profits in the key areas.
“Another significant increase to the national minimum wage and national insurance in April 2025 will add to the ongoing escalation of payroll costs against prior years.
“The ongoing escalation of other costs in 2024 particularly food and supply costs have added additional pressure on profitability and the energy market also continues to be volatile.”
In November 2023 LBN revealed that auditors of Liverpool-based Centre Island had warned in the company’s annual report of a “material uncertainty” that “may cast significant doubt on the group’s ability to continue as a going concern”.
Subsequently, in May 2024, the group secured a £36m refinancing of its bank debt for a five-year term until 2029. This has given Centre Island confidence to invest in its hotels and in the latest report the directors are upbeat about future prospects.
However, auditors have again pointed out that a covenant within its banking facility is forecast to be breached by the end of 2025. A formal waiver has not been granted hence a fresh warning about the group’s ability to “continue as a going concern”.
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In response, the directors said they are confident the strong relationship the company has with its bank means the issue will likely not present a problem.
They state in the accounts: “The group’s good relationship with its long-standing and supportive bankers, with whom the directors are in regular contact, and the supportive shareholders and related party lenders, the directors are satisfied that the group is going concern and that it remains appropriate to prepare these financial statements on a going concern basis.”