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Registered number: 04170018









MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED









ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
COMPANY INFORMATION


Directors
S M Zeid 
Sheikh M Y A Al-Khereiji 
J A Gil 
P A Simmons 




Company secretary
Citco Management (UK) Limited



Registered number
04170018



Registered office
7 Albemarle Street

London

W1S 4HQ




Independent auditors
Ecovis Wingrave Yeats LLP
Chartered Accountants and Statutory Auditors

3rd Floor, Waverley House

7-12 Noel Street

London

W1F 8GQ





 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 

CONTENTS



Page
Group Strategic Report
1 - 3
Directors' Report
4 - 7
Independent Auditors' Report
8 - 11
Consolidated Statement of Comprehensive Income
12
Consolidated Balance Sheet
13
Company Balance Sheet
14
Consolidated Statement of Changes in Equity
15
Company Statement of Changes in Equity
16
Consolidated Statement of Cash Flows
17
Notes to the Financial Statements
18 - 41


 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

Results
 
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.

Principal risks and uncertainties
 
Credit risk
 
Credit risks are managed by the application of credit approvals and monitoring procedures.

Operational risks
 
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. 

Staff
 
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.

Business travel
 
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.

Page 1

 
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.










 
Page 2

 
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.



J A Gil
Director

Page 3

 
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.

Directors' responsibilities statement

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.
 
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.

 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 2006They 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.

Page 4

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Principal activities

The principal activity of Marriott European Hotel Operating Company Limited (“the Company”) is to provide asset management and administrative services to the Company’s immediate parent, Marriott European Holdings Limited (MEH), a company incorporated in Jersey and the MEH group of operating companies, including monitoring the performance of the hotels developed, owned, leased and operated by the MEH group.
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.

Results and dividends

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).

Directors

The directors who served during the year were:

Sheikh M Y A Al-Khereiji 
S M Zeid 
J A Gil 
P A Simmons 

Employee involvement

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.

Page 5

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Equal opportunities

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.

Qualifying third party indemnity provisions

The Company has granted an indemnity to one or more of its directors against liability in respect of proceedings brought by third parties, subject to the conditions set out in respect of proceedings brought by third parties and subject to the conditions set out in the Companies Act 2006. Such qualifying third-party indemnity provision remains in force as at the date of approving the directors’ report.

Streamlined energy and carbon reporting

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.

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company and the Group's auditors are unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company and the Group's auditors are aware of that information.

Auditors

The auditorsEcovis Wingrave Yeats LLPwill be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

Page 6

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

This report was approved by the board on 3 January 2025 and signed on its behalf.
 





J A Gil
Director

Page 7

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 

Opinion


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 policiesThe 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).


In our opinion the Group's and Parent Company's financial statements:


give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 31 December 2023 and of the Group's profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


Basis for opinion


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.


Conclusions relating to going concern


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.


Page 8

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED (CONTINUED)


Other information


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 ReportOur 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.


Opinion on other matters prescribed by the Companies Act 2006
 

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.


Matters on which we are required to report by exception
 

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.


We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:


adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent Company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.


Responsibilities of directors
 

As explained more fully in the Directors' Responsibilities Statement set out on page 4, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.


In preparing the financial statements, the directors are responsible for assessing the Group's and the Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

Page 9

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED (CONTINUED)



Auditors' responsibilities for the audit of the financial statements
 

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.


Page 10

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED (CONTINUED)


Use of our report
 

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 2006Our 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.





Stuart Hinds (Senior Statutory Auditor)
  
for and on behalf of
Ecovis Wingrave Yeats LLP
 
Chartered Accountants and Statutory Auditors
  
3rd Floor, Waverley House
7-12 Noel Street
London
W1F 8GQ

3 January 2025
Page 11

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023

2023
2022
Note

  

Turnover
 4 
65,841,713
56,417,020

Cost of sales
  
(31,100,771)
(26,821,395)

Gross profit
  
34,740,942
29,595,625

Administrative expenses
  
(35,010,421)
(30,691,759)

Other operating income
 5 
3,960,131
3,910,482

Operating profit
 6 
3,690,652
2,814,348

Interest receivable and similar income
 10 
98,623
82,171

Interest payable and similar expenses
 11 
(203,759)
(148,890)

Profit before taxation
  
3,585,516
2,747,629

Tax on profit
 12 
(2,318,972)
(1,213,495)

Profit for the financial year
  
1,266,544
1,534,134

  

Foreign exchange translation gain
  
1,439
199,077

Other comprehensive income for the year
  
1,439
199,077

Total comprehensive income for the year
  
1,267,983
1,733,211

Profit for the year attributable to:
  

Owners of the Parent Company
  
1,266,544
1,534,134

  
1,266,544
1,534,134

There were no recognised gains and losses for 2023 or 2022 other than those included in the consolidated statement of comprehensive income.

The notes on pages 18 to 41 form part of these financial statements.

Page 12

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
REGISTERED NUMBER: 04170018

CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2023

2023
2022
Note

Fixed assets
  

Tangible assets
 13 
11,883,761
8,116,856

  
11,883,761
8,116,856

Current assets
  

Stocks
 15 
300,774
275,677

Debtors: amounts falling due within one year
 16 
6,909,929
6,970,598

Cash at bank and in hand
 17 
21,558,258
21,010,195

  
28,768,961
28,256,470

Creditors: amounts falling due within one year
 18 
(41,791,636)
(39,250,843)

Net current liabilities
  
 
 
(13,022,675)
 
 
(10,994,373)

Total assets less current liabilities
  
(1,138,914)
(2,877,517)

Creditors: amounts falling due after more than one year
 19 
(3,233,840)
(3,567,680)

Provisions for liabilities
  

Deferred taxation
  21
(3,814,180)
(3,009,718)

  
 
 
(3,814,180)
 
 
(3,009,718)

Net liabilities
  
(8,186,934)
(9,454,915)


Capital and reserves
  

Called up share capital 
 24 
2
2

Profit and loss account
 25 
(8,186,936)
(9,454,917)

Equity attributable to owners of the 
parent Company
  
(8,186,934)
(9,454,915)


The financial statements were approved and authorised for issue by the board and were signed on its behalf on 3 January 2025.




J A Gil
Director

The notes on pages 18 to 41 form part of these financial statements.

Page 13

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
REGISTERED NUMBER: 04170018

COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2023

2023
2022
Note

Fixed assets
  

Fixed asset investments
 14 
2,867,000
2,867,000

  
2,867,000
2,867,000

Current assets
  

Debtors: amounts falling due within one year
 16 
201,788
164,797

Cash at bank and in hand
 17 
787,687
521,547

  
989,475
686,344

Creditors: amounts falling due within one year
 18 
(25,091,155)
(23,361,904)

Net current liabilities
  
 
 
(24,101,680)
 
 
(22,675,560)

Total assets less current liabilities
  
(21,234,680)
(19,808,560)

  

Creditors: amounts falling due after more than one year
 19 
(2,900,000)
(2,900,000)

  

Net assets excluding pension asset
  
(24,134,680)
(22,708,560)

Net liabilities
  
(24,134,680)
(22,708,560)


Capital and reserves
  

Called up share capital 
 24 
2
2

Profit and loss account carried forward
 25 
(24,134,682)
(22,708,562)

Shareholders' deficit
  
(24,134,680)
(22,708,560)


The financial statements were approved and authorised for issue by the board and were signed on its behalf on 3 January 2025.




J A Gil
Director

The notes on pages 18 to 41 form part of these financial statements.

Page 14

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023


Called up share capital
Profit and loss account
Total equity



At 1 January 2022
2
(11,188,128)
(11,188,126)



Profit for the year
-
1,534,134
1,534,134

Foreign currency translation gain
-
199,077
199,077
Total comprehensive income for the year
-
1,733,211
1,733,211



At 1 January 2023
2
(9,454,917)
(9,454,915)



Profit for the year
-
1,266,544
1,266,544

Foreign currency translation gain
-
1,437
1,437
Total comprehensive income for the year
-
1,267,981
1,267,981


At 31 December 2023
2
(8,186,936)
(8,186,934)


The notes on pages 18 to 41 form part of these financial statements.

Page 15

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 

COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023


Called up share capital
Profit and loss account
Total equity



At 1 January 2022
2
(23,113,929)
(23,113,927)



Profit for the year
-
405,367
405,367



At 1 January 2023
2
(22,708,562)
(22,708,560)



Loss for the year
-
(1,426,120)
(1,426,120)


At 31 December 2023
2
(24,134,682)
(24,134,680)


The notes on pages 18 to 41 form part of these financial statements.

Page 16

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023

2023
2022

Cash flows from operating activities

Profit for the financial year
1,266,544
1,534,134

Adjustments for:

Depreciation of tangible assets
1,548,879
1,525,777

Interest payable
203,759
148,890

Interest receivable
(98,623)
(82,171)

Taxation charge
2,318,973
1,213,495

(Increase) in stocks
(25,097)
(76,514)

Decrease/(increase) in debtors
61,076
(238,976)

Increase in creditors
1,985,937
989,143

Foreign exchange charge
1,439
203,744

Taxation paid
(1,293,905)
(690,185)

Net cash generated from operating activities

5,968,982
4,527,337


Cash flows from investing activities

Purchase of tangible fixed assets
(5,315,783)
(3,271,817)

Interest received
98,623
82,171

Net cash from investing activities
(5,217,160)
(3,189,646)

Cash flows from financing activities

Interest paid
(203,759)
(148,890)

Net cash used in financing activities
(203,759)
(148,890)

Net increase in cash and cash equivalents
548,063
1,188,801

Cash and cash equivalents at beginning of year
21,010,195
19,821,394

Cash and cash equivalents at the end of year
21,558,258
21,010,195


Cash and cash equivalents at the end of year comprise:

Cash at bank and in hand
21,558,258
21,010,195

21,558,258
21,010,195


The notes on pages 18 to 41 form part of these financial statements.

Page 17

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

1.


Statutory information

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

 
2.1

Basis of preparation of financial statements

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:

 
2.2

Basis of consolidation

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.

Page 18

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.3

Going concern

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.

Page 19

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.4

Turnover

Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:

Sale of goods

Turnover from the sale of goods is recognised when all of the following conditions are satisfied:
the Group has transferred the significant risks and rewards of ownership to the buyer;
the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the Group will receive the consideration due under the transaction; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services

Turnover from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
the amount of revenue can be measured reliably;
it is probable that the Group will receive the consideration due under the contract;
the stage of completion of the contract at the end of the reporting period can be measured reliably; and
the costs incurred and the costs to complete the contract can be measured reliably.

 
2.5

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

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.

Page 20

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)


2.5
Tangible fixed assets (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:

Leasehold property
-
over the term of the lease
Fixtures, fittings & equipment
-
over 5 to 8 years

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.

  
2.6

Impairment of fixed assets

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.

 
2.7

Valuation of investments

Investments in subsidiaries are measured at cost less accumulated impairment.

 
2.8

Stocks

Stocks comprise of consumable inventories used in the hotel operations. Stocks are stated at the lower of cost and net realisable value. At each reporting date, inventories are assessed for impairment. If inventory is impaired the carrying amount is reduced to its selling price less the cost to complete and sell. The impairment loss is recognised in the profit or loss.


 
2.9

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

Page 21

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.10

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

In the Consolidated Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.
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.

  
2.11

Financial instruments

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.
 




Page 22

 
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.

 
2.12

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

 
2.13

Government grants

Government grants are accounted under the accruals model as permitted by FRS 102. During the period, the Group has received governmental support for the three hotels based in Germany from the German Aid scheme. The government grants received in the year are recognised as other income in the Consolidated Statement of Comprehensive Income in the same period as the related expenditure.

  
2.14

Foreign currency translation

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).
Page 23

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)


 
2.15

Finance costs

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

 
2.16

Leasing and hire purchase

Where assets are financed by leasing agreements that give rights approximating to ownership (finance leases), the assets are treated as if they had been purchased outright. The amount capitalised is the present value of the minimum lease payments payable over the term of the lease. The corresponding leasing commitments are shown as amounts payable to the lessor. Depreciation on the relevant assets is charged to profit or loss over the shorter of estimated useful economic life and the term of the lease. 

Lease payments are analysed between capital and interest components so that the interest element of the payment is charged to profit or loss over the term of the lease and is calculated so that it represents a constant proportion of the balance of capital repayments outstanding. The capital part reduces the amounts payable to the lessor. 

Rentals paid under operating leases are charged to the profit and loss on a straight-line basis.


 
2.17

Pensions

Defined contribution pension plan

The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Group in independently administered funds.

 
2.18

Interest income

Interest income is recognised in the Consolidated Statement of Comprehensive Income using the effective interest method.

 
2.19

Provisions for liabilities

Provisions are recognised when an event has taken place that gives rise to a legal or constructive obligation, a transfer of economic benefits is probable and a reliable estimate can be made.
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
 
Increases in provisions are generally charged as an expense to the Consolidated Statement of Comprehensive Income. When payments are eventually made, they are charged to the provision carried in the Balance sheet.

Page 24

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.20

Current and deferred taxation

The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company and the Group operate and generate income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.


Page 25

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

3.


Judgements in applying accounting policies and key sources of estimation uncertainty

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Depreciation of tangible fixed assets

The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates based on the economic utilisation and the physical condition of the assets and/or additional impairments are recognised. See note 14 for they carrying amount of property plant and equipment.
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

Management is required to assess whether it is appropriate to recognise a deferred tax asset relating to taxable losses available to the Group and Company. In making this assessment, management takes into consideration the likelihood of future taxable profits being available to utilise against taxable losses. See note 13 for details of the deferred tax asset not recognised in these financial statements. 
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

The decision over whether the leases entered into should be operating or finance leases has been made by management. The decisions have been made based on assessment of the risks and rewards of ownership. 
Foreign exchange

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).

Page 26

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

4.


Turnover and segmental analysis

Contribution to turnover is analysed as follows:





A geographical breakdown of performance is detailed below:


Group
2023
Group
2022



France
16,081,942
14,850,302

Germany
49,759,771
41,566,718

65,841,713
56,417,020


5.


Other operating income

Group
2023
Group
2022

Other operating income
2,707,442
2,250,440

Covid relief from German governments
454,546
1,660,042

Energy subsidy from German governments
798,143
-

3,960,131
3,910,482


The other operating income relates to cluster services. Cluster services are services provided by employees shared with other hotels in the same location.


6.


Operating profit

The operating profit is stated after charging/(crediting):

Group
2023
Group
2022

Depreciation of tangible fixed assets
1,549,472
1,525,777

Operating lease rentals – land and buildings
10,171,670
9,801,533

Operating lease rentals – other
35,327
59,485

Realised foreign exchange gains
(11,719)
(26,789)

Page 27

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

7.


Auditors' remuneration

During the year, the Group obtained the following services from the Company's auditors:


Group
2023
Group
2022

Fees payable to the Company's auditors in respect of:

Audit of the Company's annual accounts
92,294
96,418


8.


Staff Costs

Group
2023
Group
2022
Company
2023
Company
2022
        
        
        
        

Wages and salaries

20,993,037

17,951,974

132,663
 
131,145
 
Social security costs

4,153,062

3,454,638

12,962
 
18,663
 
Cost of defined contribution scheme

413,131

357,243

20,535
 
7,457
 

25,559,230

21,763,855

166,160
 
157,265
 

The average monthly number of employees, including the directors, during the year was as follows:


Group
2023
Group
2022



Rooms
105
109

Food and Beverage
147
134

Other
133
131

385
374


9.


Directors' remuneration

The directors received no remuneration in respect of their services to the Group for the year (2022: €Nil).

Page 28

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

10.


Interest receivable and similar income

Group
2023
Group
2022


Interest receivable and similar income
98,623
82,171


11.


Interest payable and similar expenses

Group
2023
Group
2022


Interest payable and similar expenses
203,759
148,890


12.


Taxation


Group
2023
Group
2022


Foreign tax


Foreign tax on income for the year
1,514,510
808,306

Total current tax
1,514,510
808,306

Deferred tax


Origination and reversal of timing differences
804,462
405,189

Total deferred tax
804,462
405,189


Tax on profit
2,318,972
1,213,495
Page 29

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
 
12.Taxation (continued)


Factors affecting tax charge for the year

The tax assessed for the year is higher than (2022 - higher than) the standard rate of corporation tax in the UK of 23.52% (2022 - 19%). The differences are explained below:

Group
2023
Group
2022


Profit on ordinary activities before tax
3,585,516
2,747,629


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 23.52% (2022 - 19%)
843,313
522,050

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
2,861
-

Higher rate taxes on overseas earnings
433,474
-

Other permanent differences
556,373
437,124

Deferred tax not recognised
497,708
515,321

Net adjustment to changes in deferred tax rates
(11,303)
(190,867)

Dividends from UK companies
-
5,167

Use of brought forward losses
-
(75,300)

Other differences leading to an increase (decrease) in the tax charge
(3,454)
-

Total tax charge for the year
2,318,972
1,213,495

Page 30

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

13.


Tangible fixed assets

Group






Fixtures and fittings




Cost


At 1 January 2023
37,659,106


Additions
5,316,377


Disposals
(6,592,847)



At 31 December 2023

36,382,636



Depreciation


At 1 January 2023
29,542,250


Charge for the year
1,549,472


Disposals
(6,592,847)



At 31 December 2023

24,498,875



Net book value



At 31 December 2023
11,883,761



At 31 December 2022
8,116,856

Page 31

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

14.


Fixed asset investments

Company





Investments in subsidiary companies




Cost


At 1 January 2023
18,985,910



At 31 December 2023

18,985,910



Impairment


At 1 January 2023
16,118,910



At 31 December 2023

16,118,910



Net book value



At 31 December 2023
2,867,000



At 31 December 2022
2,867,000

The Group's investment in the Roissy hotel was been written down to €Nil in the prior year. The hotel in Roissy has made significant losses in the current year and forecasts show losses for the foreseeable future. The Group does not expect any of the investment value to be recoverable.
 

Page 32

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

Subsidiary undertakings


The following were subsidiary undertakings of the Company:

Name

Registered office

Class of shares

Holding

Cheshunt Hotel Operating Company Limited
England and Wales
Ordinary
100%
Roissy CYBM SAS
France
Ordinary
100%
Hamburg Marriott Hotel Management GmbH
Germany
Ordinary
100%
Munich CY Schwanthaler Operating Company GmbH
Germany
Ordinary
100%
Cologne MH Operating Company GmbH
Germany
Ordinary
100%

All investments are direct holdings.
The principal activity of all subsidiaries in the Group is that of a hotel operating company.
In July 2021, the Company started the process to liquidate its 100% direct investment in Cheshunt Hotel Operating Company Limited. At the year end, Cheshunt Hotel Operating Company Limited is still under liquidation.


15.


Stocks

Group
Group
2023
2022

Consumables
300,774
275,677


Page 33

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

16.


Debtors

Group
Group
Company
Company
2023
2022
2023
2022


Trade debtors
4,267,593
3,542,546
-
-

Amounts owed by group undertakings
-
-
142,000
139,469

Other debtors
1,162,323
2,411,364
3,346
3,039

Prepayments and accrued income
288,987
273,702
6,230
-

VAT recoverable
1,191,026
742,986
50,212
22,289

6,909,929
6,970,598
201,788
164,797


A provision was made regarding the loan due from Cheshunt Hotel Operating Company Limited to Marriott European Hotels Operating Company Limited at year end as the loan was deemed irrecoverable. This was formalised in 2022.


17.


Cash and cash equivalents

Group
Group
Company
Company
2023
2022
2023
2022

Cash at bank and in hand
21,558,258
21,010,195
787,687
521,547

21,558,258
21,010,195
787,687
521,547


Within the cash balance of the Group as at 31 December 2023 is an amount of €7,458,959 (2022: €10,553,336) which is restricted. The restricted Cash is cash which can only be used for the purchase of fixtures, furniture and equipment as defined in the management and lease agreements.

Page 34

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

18.


Creditors: Amounts falling due within one year

Group
Group
Company
Company
2023
2022
2023
2022

Trade creditors
6,905,250
6,728,907
31,250
40,479

Loan due to related parties
-
-
26,422
26,422

Amounts owed to group undertakings
-
-
3,726,797
1,839,698

Amounts owed to other participating interests
21,424,573
21,521,463
21,007,573
21,141,932

Corporation tax
1,226,456
1,005,851
-
-

VAT payable
270
263
-
-

Other creditors
5,761,038
4,013,225
-
-

Accruals and deferred income
6,474,049
5,981,134
299,113
313,373

41,791,636
39,250,843
25,091,155
23,361,904


Within amounts owed to group undertakings, there is €2,495 (2022 - €2,403) in regards to a loan to a group undertaking which incurs interest at Euribor + 0.5% per annum. The loan was formalised on 1 January 2009, is unsecured and repayable on demand.
Within amounts owed to group undertakings, there is €525,313 (
2022 - €509,510) in regards to a loan to a group undertaking which incurs interest at Euribor + 0.5% per annum. The loan was formalised on 21 March 2017, is unsecured and repayable on demand.
Within amounts owed to group undertakings, there is €527,599 (2022 - €511,546) in regards to a loan to a group undertaking which incurs interest at Euribor + 0.5% per annum. The loan was formalised on 16 April 2018, is unsecured and repayable on demand.
Within amounts owed to group undertakings, there is €839,423 (2022 - €813,727) in regards to a loan to a group undertaking which incurs interest at Euribor + 0.5% per annum. The loan was formalised on 29 June 2018, is unsecured and repayable on demand.
Within amounts owed to group undertakings, there is €617,162 (2022 - €Nil) in regards to a loan to a group undertaking which incurs interest at Euribor + 1% per annum. The loan was formalised on 27 January 2023, is unsecured and repayable on demand.
Within amounts owed to group undertakings, there is €808,005 (2022 - €Nil) in regards to a loan to a group undertaking which incurs interest at Euribor + 1% per annum. The loan was formalised on 16 October 2023, is unsecured and repayable on demand.
Within amounts owed to group undertakings, there is €403,890 (2022 - €Nil) in regards to a loan to a group undertaking which incurs interest at Euribor + 1% per annum. The loan was formalised on 16 October 2023, is unsecured and repayable on demand.
The remaining amounts owed to group undertakings are unsecured, interest free and repayable on demand.

Page 35

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

19.


Creditors: Amounts falling due after more than one year

Group
Group
Company
Company
2023
2022
2023
2022

Other creditors
333,840
667,680
-
-

Loan due to related parties
2,900,000
2,900,000
2,900,000
2,900,000

3,233,840
3,567,680
2,900,000
2,900,000


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.


20.


Provisions

Group
2023
Group
2022
Company
2023
Company
2022
        
        
        
        

Deferred Tax

3,814,180

3,009,718

-
 
-
 

3,814,180

3,009,718

 
 

The Group's deferred tax balance is comprised of fixed asset timing differences arising.

Page 36

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

21.


Financial instruments

Group
Group
Company
Company
2023
2022
2023
2022

Financial assets

Financial assets that are debt instruments 
measured at amortised cost
5,429,916
5,953,909
279,905
142,508

Cash at bank and in hand
21,558,258
21,010,195
787,687
521,547

26,988,174
26,964,104
1,067,592
664,055


Financial liabilities

Financial liabilities measured at amortised 
cost
43,798,750
(38,224,980)
24,765,620
(23,335,484)


The Company holds financial assets and liabilities measured at amortised cost. Those that are payable or receivable within one year shall be measured at the undiscounted amount of the cash or other consideration expected to be paid or received (net of impairment) unless the arrangement constitutes, in effect, a financing transaction.


22.


Capital commitments




At 31 December 2023 the Group and Company had capital commitments as follows:


Group
Group
2023
2022

Contracted for but not provided in these financial statements
2,135,000
5,877,000

Page 37

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

23.


Commitments under operating leases

At 31 December 2023 the Group had future minimum lease payments due under non-cancellable operating leases for each of the following periods:


Group
Group
Company
Company
2023
2022
2023
2022


Not later than 1 year
11,493,941
13,654,758
75,485
75,485

Later than 1 year and not later than 5 years
50,107,827
51,219,141
148,970
148,970

Later than 5 years
31,039,818
45,745,093
-
-

92,641,586
110,618,992
224,455
224,455

The total lease payments recognised as an expense during 2023 was €10,206,997 (2022 - €9,861,018).
At 31 December 2023 the Company has no operating lease commitments and had none in the prior year.

Page 38

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

24.


Share capital

Company
2023
Company
2022
Allotted, called up and fully paid



1 (2022 - 1) Ordinary Shares of £1 each share of 2.00
2
2

All ordinary classed shares have full voting, dividend and capital distribution rights including on the winding up of the Company. There are no restrictions placed on this class of shares. 



25.


Reserves

Profit and loss account

The profit and loss account comprises of accumulated losses.


26.


Pension commitments

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.

Page 39

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

27.


Related party transactions

During the year the Group entered into transactions, in the ordinary course of business, with related parties.

MHH and GHL are associate companies of the Marriott International, Inc. group. Marriott Hotels International, LHIF and Marriott Hotels Limited are wholly owned subsidiaries of Marriott International Inc. MEHOC is an associate company of Marriott International Inc. through indirect ownership.

Marriott European Hotel Operating Company Limited have taken the exemption under FRS 102, Section 33 Related Party Disclosures paragraph 33.1A, whereby the Company is not required to disclose transactions with other wholly owned subsidiaries. Where subsidiaries were not wholly owned, transactions are detailed below.

2023
 

Entity name
Transaction description
Purchases from related party (€)
Amounts due (to) / from related party (€)

Global Hospitality Licensing SARL (“GHL”)
Marriott Rewards, EDP, Systems,
  CTAC, Royalty, Marketing,
Incentive and licence fees
€2,614,738
(1,033,099)

Marriott de Gestion/LHIF
Shared service, Management fees and Marriott rewards
€554,669
(98,500)

Marriott Hotel Holding GmbH (“MHH”)
Management fees
€28,768
2,878

International Hotel Licensing Company S.A.R.L.
Loan to MEHOC
€Nil
(2,900,000)

Marriott Hotel Management GmbH (“MHM”)
Management Fees
€94,668
(10,143)


2022


Entity name
Transaction description
Purchases from related party (€)
Amounts due (to) / from related party (€)

Global Hospitality Licensing
 SARL (“GHL”)
Marriott Rewards, EDP, Systems,
CTAC, Royalty, Marketing,
Incentive and licence fees
€2,305,860
(993,595)

Marriott de Gestion/LHIF
Shared service, Management fees and Marriott rewards
€694,605
(23,144)

Marriott Hotel Holding GmbH (“MHH”)
Management fees
€32,696
(2,491)

International Hotel Licensing Company S.A.R.L.
Loan to MEHOC
€Nil
(2,900,000)

Marriott Hotel Management GmbH (“MHM”)
Management Fees
€70,477
(6,620)

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).

Page 40

 
MARRIOTT EUROPEAN HOTEL OPERATING COMPANY LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

28.


Controlling party

The Company is a subsidiary of Marriott European Holdings Limited, a company registered in Jersey and the ultimate parent company.

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