Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2023
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
COMPANY INFORMATION
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
CONTENTS
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The trading results for the year and the Group's financial position at the end of the year are shown in the attached financial statements. The consolidated profit after taxation for the year amounted to €1,266,544 (2022: €1,534,134) and the foreign exchange gain of €1,439 (2022: €199,077) resulted in a total comprehensive income for the year of €1,267,390 (2022: €1,733,211).
The prior year results for 2022 take into account the start of the recovery from the pandemic during Q2 2022. The strong recovery continued in 2023 and with occupancy levels returning to 84% of historic pre pandemic levels by the end of 2023 and room rates exceeding pre pandemic levels in the three hotels in Germany by 12.8%, 4.7% and 34.2% respectively. The results also include the positive impact from access to further government grant funding in Germany during both 2022 and 2023 as a result of the pandemic. In 2023 a total of €454,546 (2022: €1,660,042) was received in COVID grant funding and a total of €798,143 (2022: €Nil) was received in Energy subsidy grant funding.
Credit risks are managed by the application of credit approvals and monitoring procedures.
The hotel industry saw a continued strong demand in 2023. However, rising operational costs, and inflation as well as staffing shortages and increase in payroll costs are the biggest risks impacting our cashflows and performance. Therefore, the top priorities are controlling inflationary pressures, adjusting to changing customer needs, recruiting and restaffing in order to address labour shortages.
Furthermore, as the sustainability agenda grows, government regulations such as the Paris Agreement, and environment initiatives like SBTi (Science Based Targets Initiative) Net-Zero Standard are now commonplace. With regulation and reporting requirements becoming more complex, the risk and cost of non-compliance will increase. Additionally, the costs of implementing ESG initiatives involve a whole new set of skills. Finance professionals for example, will need to understand the impact of global and local sustainability challenges and may require more complex ESG specific skills, such as climate scenario analysis or modelling.
Due to the pandemic, many furloughed or laid-off employees in the hospitality industry moved to other industries or left the workforce entirely, which has resulted in a rise in staff shortages. In order to attract new talent, hoteliers will need to compete with other industries as demand for labour rises and supply is limited. It will become more challenging in the future to pass costs onto the customer through price and rate increases, so hotel operators will need to manage their cash flow and cost structure actively.
For Business travellers an exceptional hotel experience has become crucial when deciding on where to stay. Hotels have had to adapt their guest rooms to work-friendly rooms with free WiFi and a comfortable workspace area, offer free breakfast, personal wellness and a fitness centre. Companies prefer their corporate travellers to stay at hotels that offer a good working environment for the duration of their business travel.
Business travellers are also looking for recognition and personalisation which means that they expect the hotel to pick up their preferences through their automated hotel booking services which will have an influence on the hotel of their choice and determine their loyalty to the hotel’s client base.
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Cyber and data security
We collect, store, use, and transmit large volumes of data regarding associates, guests, customers, owners, landlords and our own business operations, including credit card numbers, loyalty data, and other personal information and it is, therefore, of utmost importance to us to protect this data in particular after a series of high profile breaches in the hotel industry globally. It may take time and investment to maintain and keep up with the ever-changing legal and regulatory requirements and obligations which may result in additional costs in the future. Future developments Pent-up demand from consumers is driving a recovery in Europe's hotel and tourism industries. Solid growth has been supported by the resurgence of intra-regional tourism, with Europe reaching 90% of pre-pandemic levels. Additionally, the number of visitors from the United States, the main source of long-haul tourism, has increased significantly. Travelers from all over the world continue to choose Europe as their destination, especially for important coastal and gateway cities. Over the past few years, Europe has accounted for over half of all international travel. But there are obstacles in the way of tourism's comeback as well. High inflation and rising oil prices will drive up the cost of travel and lodging in 2023, making the economic climate the primary factor impeding an effective recovery of international tourism. It follows that travellers are anticipated to travel closer to home and look for better deals. Negative risks also include the uncertainty brought on by Russia's aggression against Ukraine and other growing geopolitical tensions. Financial key performance indicators Substantially all of the Company’s revenue is derived from the operation of its leased hotels. Occupancy and Average Daily Room Rate (“ADR”) are the major drivers of Rooms Revenue. The performance indicator used to explain changes is the net revenue per available room (“RevPAR”), which is the product of ADR and average daily occupancy. Fluctuations in revenues are driven largely by general economic and local market conditions. Guest demographics also affect the hotel revenues. In addition to the economic conditions, supply is another factor to consider. An increase in supply will have a direct impact on the RevPAR as competitive pressures force the hotel operators to lower rates in order compete during weak periods.
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Section 172(1) statement Information required under s172(1) of the Companies Act 2006 which is not documented below is shown within the strategic report and directors report. The S172 statement focuses on matters of strategic importance to Marriott European Hotel Operating Company Limited. The Board believes that, individually and collectively, it acts in a way that it considers, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, while having regard to other stakeholders and factors set out in section 172 (1) (a-f) (‘S172’) of the Companies Act 2006. In order for the Company and Group to comply with its section 172 obligations, the Board considers relevant stakeholders to include not only the members themselves, but also customers, employees and key suppliers, including landlords. The four hotels of the Group are managed by Marriott International in accordance with the management agreements each hotel has entered into. As the manager, Marriott International has established a high level of commitment to employees, customers and owners and encourages employee involvement and strives to ensure equal opportunities for all staff through its employee engagement surveys twice a year.
The hotels of the Group place a strong emphasis on the importance of engaging with customers throughout their experience. They ensure offerings are up to date and attractive to customers by ensuring hotel refurbishments take place. They solicit and value all feedback received from customers through customer satisfaction surveys.
The hotels have implemented various programmes to minimise the impact of their operations on the environment. These include waste management, recycling programmes and energy management.
All decisions made by directors are in line with the Group’s growth strategy and aim to create economic opportunities. The Board ensures that all decisions are taken for the long term, and collectively and individually aims to always uphold the highest standard of conduct.
The key decisions made during 2023 centred on:
This report was approved by the board on 3 January 2025 and signed on its behalf.
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The directors present their report and the financial statements for the year ended 31 December 2023.
The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
The Marriott European Hotel Operating Company group is comprised principally of the Company and its subsidiaries which operate hotels in Germany and France. The directors consider that the Company and its subsidiaries will continue in operational existence for the foreseeable future and consequently the financial statements have been prepared on a going concern basis.
The main focus of the Marriott hotels in the Group has been to preserve profit margins by:
∙Driving revenue;
∙Increasing market share;
∙Managing costs;
∙Sustainability.
Given the current economic climate, we have to stay vigilant about issues like staffing shortages, geopolitical instability, and the possible effects of the cost-of-living crisis on tourism. Our Hotels need to be on the lookout for emerging trends and make adjustments to meet the constantly shifting needs of their clientele. By doing this, they can make sure they stay in the market and keep giving their customers outstanding service.
Furthermore, sustainability has become one of the most significant trends in the hospitality sector, and hotels are always looking for ways to lessen their environmental effect. In 2024, hotels will continue to implement eco-friendly technologies like solar energy, renewable energy sources, and water conservation systems to enhance their sustainability as well as energy-efficient appliances, the use of recycled materials, and the installation of LED lighting are some additional initiatives. They will ultimately save money and lessen our environmental impact by doing this.
The profit for the year, after taxation, amounted to €1,266,544 (2022 - €1,534,134).
The directors do not recommend the payment of dividend (2022: €Nil).
The directors who served during the year were:
The Group has maintained its policy of using staff publications, personal briefings and regular meetings to provide information to all its employees and to encourage their involvement.
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
The Group strives to ensure that there is no discrimination on the grounds of sex, race, religion, disability or ethnic origin. This policy relates to recruitment, promotion and all matters relating to employment. It is supported through proactive internal publicity, through the quality support network and enforced through the discipline code. It is also the Group’s policy to offer equal opportunities to disabled persons and to provide them with the same opportunities for training, career development and promotion that are available to all employees with regard to their qualifications and abilities.
Streamlined energy and carbon reporting (SECR) The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 (the 2018 Regulations) implement the government’s policy on Streamlined Energy and Carbon Reporting (SECR). ‘The 2018 Regulations’ require large unquoted companies that have consumed (in the UK), more than 40,000 kilowatt-hours (kWh) of energy in the reporting period to include energy and carbon information within their directors’ report, for any period beginning on or after 1 April 2019.
None of the Group’s subsidiaries meet the definition of a large company nor are there any UK subsidiaries which traded in the year ended 31 December 2023 or subsequently. The Group’s parent company is also a low energy user. This means that neither the Parent company nor its subsidiaries are obliged to include energy and carbon information in the Director’s Report.
The directors have taken advantage of this exemption in the preparation of these financial statements.
The auditors, Ecovis Wingrave Yeats LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
This report was approved by the board on
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
We have audited the financial statements of Marriott European Hotel Operating Company Limited (the 'Parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2023, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Company Balance Sheet, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the Parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
∙We determined that the laws and regulations which are directly relevant to the financial statements are those that relate to the reporting framework Financial Reporting. Standard 102 and the relevant tax compliance regulations in the jurisdictions in which the Company operates. We evaluated the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
∙In addition, there are other significant laws and regulations which may have an effect on the determination of the amounts and disclosures in the financial statements being those laws and regulations. For these laws and regulations, the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through withdrawal of trading licences or regulatory approval of products, fines or litigation being imposed. As required by the auditing standards, auditing procedures in respect of non-compliance with these identified laws and regulations are limited to enquiry of the director and other management and inspection of regulatory and legal correspondence, if any.
∙We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur, by meeting with a number of individuals, including with individuals outside of the finance function, and conducted interviews to understand where they considered there was susceptibility to fraud.
∙We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to areas of estimate and judgement in the financial.
∙Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations and fraud risks identified in the paragraphs above. In addition to the audit procedures, we remained alert to any indications of non-compliance throughout the audit. The specific audit procedures performed included:
°Review of large and unusual bank transactions;
°Identifying and testing journal entries;
°Review of testing procedures by component auditors.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED (CONTINUED)
This report is made solely to the Parent Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company's members those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants and Statutory Auditors
3rd Floor, Waverley House
7-12 Noel Street
W1F 8GQ
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
REGISTERED NUMBER: 04170018
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 3 January 2025.
The notes on pages 18 to 41 form part of these financial statements.
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
REGISTERED NUMBER: 04170018
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 18 to 41 form part of these financial statements.
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Marriott European Hotel Operating Company Limited is a private company, limited by shares, incorporated in England & Wales, registration number 04170018. The registered office is 7 Albemarle Street, London, W1S 4HQ.
2.Accounting policies
The financial statements, which have been denominated in Euro, have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The Group financial statements consolidate the financial statements of Marriott European Hotel Operating Company Limited and its subsidiary undertakings drawn up to 31 December 2023. The results of subsidiaries acquired are consolidated for the period from the date on which control passed. The acquisition method of accounting has been adopted. In preparing the separate financial statements of the parent Company, advantage has been taken of the following disclosure exemptions as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland": - the requirements of Section 7 Statement of Cash Flows - the requirements of Section 3 Financial Statement Presentation paragraph 317(d).
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance Sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases. In accordance with the transitional exemption available in FRS 102, the Group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 01 January 2014.
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
In order to form their conclusions relating to the going concern basis of preparation, the directors have prepared forecast cashflow information to cover a period until December 2025, have tested certain sensitivities and have considered the extent and sources of funding which are available to the company.
Our Cashflow forecast takes into account that Occupancy levels and ADR are expected to increase.
Strong demand continued in 2023. Hotel Revenues in 2023 increased by €9.4M (16.7%) over 2022 and Hotel Net Operating Profit after rent, but before COVID subsidies, increased by €1M over 2022.
The Group is forecasting an increase in Revenues of €7.4M in 2024 and an increase in Hotel Net Operating Profit after rent of €635K compared to 2023.
As a result, the Group's cash balances have stabilised. Nonetheless, in view of its profit for the year ended 31 December 2023 of €1,267,983 (2022: €1,733,211) and its continuing net liabilities position 31 December 2023: €8,186,934 (2022: €9,454,915; 2021: €11,188,126), and the current economic risks in terms of high inflation, staffing shortages and ongoing cost of living crisis, in Q4 2023 the directors of the Company sought and received confirmation from the Parent undertaking that sufficient financial support will be forthcoming over the going concern period.
The directors of the Company have made the enquiries they considered to be necessary in relation to the available financial support. In doing so, the directors of the Company have had particular regard to the contractual agreement that the Parent undertaking has to further funding from new equity subscriptions from existing shareholders, should that be required.
Taking this together with the Group's available financial resources and the stabilisation and subsequent improvement in operating cash generation in 2024, the directors consider it appropriate to prepare the financial statements on a going concern basis.
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
The Group adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the Group. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Assets that are subject to depreciation or amortisation are assessed at each balance sheet date to determine whether there is any indication that the assets are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset (or cash-generating unit to which the asset has been allocated) is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's (or CGU's) fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Non-financial assets that have been previously impaired are reviewed at each balance sheet date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased.
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Cash and cash equivalents also includes cash which is subject to restrictions on the purpose for which it is used, as further explained in note 18.
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
The Group has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.
Financial instruments are recognised in the Group's Balance Sheet when the Group becomes party to the contractual provisions of the instrument. Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously. Basic financial assets Basic financial assets, which include trade and other debtors, cash and bank balances, are initially measured at their transaction price (adjusted for transaction costs except in the initial measurement of financial assets that are subsequently measured at fair value through profit and loss) and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other debtors due with the operating cycle fall into this category of financial instruments. Financial liabilities Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Basic financial liabilities, which include trade and other creditors, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price (adjusting for transaction costs except in the initial measurement of financial liabilities that are subsequently measured at fair value through profit and loss). When this constitutes a financing transaction,whereby the debt instrument is measured at the present value of the future payments discounted at a market rate of interest, discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method. Trade creditors are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade creditors are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Functional and presentation currency
The Company's functional and presentational currency is Euros.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
The financial statements of the subsidiary undertakings which have a functional currency other than Euro are translated at the rate of exchange ruling at the balance sheet date, The exchange differences arising on the retranslation of opening net assets are taken directly to reserves.
Foreign currency amounts have been translated at year end rates of EUR/GBP 1.1539 (2022: 1.1277) and USD/GBP 1.2747 (2022: 1.2039) and the average rate of EUR/GBP 1.15 (2022:1.1732) and USD/GBP 1.2434 (2022: 1.2362).
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Depreciation of tangible fixed assets Impairment of tangible fixed assets Management continually use judgement to ascertain whether there are indicators of impairment of the Group's tangible fixed assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset and where it is a component of a larger cash-generating unit, the viability and expected future performance of that unit. Deferred tax asset Intercompany debtor recoverability Management applies its judgement when estimating the recoverable value of amounts owed by group undertakings. When assessing the recoverability, management considers factors including but not limited to the aging profile of the debtors and historical experience as well as certain strategic factors. Impairment of investment in subsidiaries Management considers whether the investment in the subsidiaries should be impaired. At the reporting date, where an indication of impairment is identified, an impairment review is performed on the carrying value of the investment and the recoverable value is estimated. The review considers the value in use of the investment based on the latest forecasts. The forecasts are based on the judgement of management of the entity concerned. Leases Foreign exchange
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
The directors received no remuneration in respect of their services to the Group for the year (2022: €Nil).
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
12.Taxation (continued)
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page 31
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page 34
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page 35
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
During financial year 2021, the Company drew down €2.9m of a €4.0m facility provided by International Hotel Licensing Company S.A.R.L, a related party wholly owned by Marriott International. The loan is repayable no earlier than 22 November 2024 and no later than 22 November 2026. However, under certain conditions, this final repayment date can be extended by up to 2 years. Between the earliest repayment date and the termination date, repayments are due based on certain liquidity metrics at that time. Interest on drawn amounts is charged at Euribor plus 5%.
Other creditors principally related to deferred rent payable.
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page 37
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Profit and loss account
The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administrated fund. The pension cost recharge represents contributions payable by the Group of the fund and amounted to €6,596 (2022: €5,856).
Contributions totalling €Nil (2022: €Nil) were payable to the fund at the balance sheet date and are included in creditors.
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2022
Foreign currency amounts have been translated at year end rates of EUR/GBP 1.1539 (2022: 1.1277) and USD/GBP 1.2747 (2022 1.2039) and the average rate of EUR/GBP 1.15 (2022: 1.1732) and USD/GBP 1.2434 (2022: 1.2362).
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MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
The Company is a subsidiary of
The largest and smallest group in which the financial statements of Marriott European Hotel Operating Company Limited are consolidated is that headed by Marriott European Holdings Limited.
In the opinion of the directors, there is no single controlling party.
Page 41
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