The Shangri-La hotel at the top of the Shard has revealed it booked a £56.2m pre-tax loss last year, driven by an impairment charge from writing down the value of its assets following years of weak results.
Occupying floors 34 to 52 of the Shard, it is the tallest hotel in western Europe and swung its doors open five years ago in a ceremony attended by Boris Johnson and Sebastian Coe.
It has never made a profit, with accumulated losses of £128.9m.
The hotel in the Shard is the only one in the UK run by Hong Kong-listed Shangri-La. It stated the turnover of the hotel is “primarily derived from the rental of rooms and food and beverage sales”.
Last year a weak sterling boosted the number of international guests in the UK, leading to a modest increase in occupancy to 79.5 per cent on a sky-high average daily rate of £411. In turn, room revenues rose four per cent to £24.1m with takings from its bar and restaurant increasing by the same percentage to £13.9m.
Income from other sources brought the hotel’s revenue to a total of £38.4m, but this was outstripped by £49.7m of costs.
The hotel’s 202 rooms and suites feature marble-clad bathrooms with heated floors, while an infinity pool with water continually pouring over its edges sits on the 52nd floor. According to the accounts, the hotel owns £650,000 in art alone.
The filings state that the value of the hotel itself was written down to just £11.4m last year after an “impairment charge of £44.5m was made” by assessing the residence’s future performance.
It left the hotel with net liabilities of £47.9m, compared to £8.6m of net assets in 2017. Despite this, the accounts state that “the company is well placed to manage its business risks”.
The hotel’s Asian owners have committed to supporting it for at least another year. In 2018, companies in the Hong Kong group boosted their borrowings to the property by £50m and its bank loans and overdraft were cleared.
The development of rival hotels poses a particular challenge to the Shangri-La. A recent report from accountancy firm BDO revealed that approximately 8,000 rooms opened in London between 2017 and 2018.
The accounts warn that “the London market continues with a high degree of uncertainty due to Brexit and remains highly competitive due to good supply of quality hotel rooms and new openings. Industry reports indicate marginal growth in hotel occupancy and average daily rate in London supported by a growing number of visitors.”