The receiver overseeing the Oak Bay Beach Hotel has offered the first look at the hotel’s financial picture.
The hotel is on an upswing financially since receiver Ernst and Young, appointed by B.C. Supreme Court, took over operations at 1175 Beach Dr. late last year, said the March 26 report.
Following its appointment, the receiver terminated employment of five members of the management team, including Kevin Walker, his wife, Shawna, and their daughter Kate.
Icon Services Ltd. has been working since Dec. 8 on a month-to-month term to manage the hotel. The company receives a base management fee of 3 per cent of the gross operations revenue with a monthly minimum of $30,000 for the first two months, and $20,000 per month thereafter, lower than the 5 per cent management agreement between Bison Properties (OBBH) and Walker Hotel Management.
The hotel went into receivership this winter owing $125 million. As of the report’s writing, the receivers have distributed $612,000 to construction lenders, a group of three organizations owed $60.5 million.
“In order for any creditor subordinate to the Construction Lenders to receive any recovery, the sale of the debtor’s property must generate transaction proceeds in excess of $70 million,” according to the report.
The District of Oak Bay is ranked as a super priority claim in the receivership of Oak Bay Beach Hotel, which owes nearly $800,000 in 2014 property taxes. The receiver commissioned the Altus Group to review and appeal the BC Assessment values which they expect will materially reduce the property taxes to be borne by the hotel in the future.
Website redevelopment is a priority as a primary marketing booking channel with 22 per cent of hotel room nights booked there. Room reservations for June through September are up 253 per cent over 2014.
The OBBH has a fundraising partnership with the David Foster Foundation. Since its re-opening, the hotel had collected approximately $20,000 from the sale of live theatre event tickets for donation to the foundation that hadn’t been remitted to the foundation as of receivership. Ernst and Young has continued the partnership, honouring the outstanding donations.
Visit ey.com/ca/oakbaybeachhotel online to see all the reports and documents from Ernst and Young.