International Hotel Investments (IHI), the owner of the Corinthia Hotels brand, is facing renewed scrutiny after a recent report revealed the scale of debt carried by one of Malta's best-known hospitality groups.
The company has returned to the bond market while holding almost €790 million in debt, a significant burden for any company, especially one that has struggled to turn expansion into consistent profits over the past decade.
These figures contradict Corinthia Group's expansion story, which has been built on maintaining a positive appearance of continued international growth and presenting positive numbers in its annual financial reports.
A closer examination of Corinthia's public accounts suggests that the nearly €800 million debt is just the tip of the iceberg. The company has net losses every year since at least 2014, with accumulated losses reaching €46 million by 2024.
These persistent losses weaken a company's ability to fund growth from its own operations and make it increasingly reliant on lenders, investors, and refinancing. In response, Corinthia has made significant cuts, including not paying dividends since 2019 and reducing staffing by 15% below 2019 levels in 2022.
Despite these financial struggles, Corinthia's expansion has continued, with new projects promoted in Rome, Asia, and Dubai. This expansion story is difficult to reconcile with the company's clear financial difficulties, raising serious questions over the financial prudence of its expansion strategy.
Corinthia's latest financial annual report shows that net debt was more than 11 times EBITDA, a level widely regarded as high by international lending standards. This means that the company's borrowings appear far larger than the earnings available to support them.
Borrowing can be sensible when it funds growth that later pays for itself, but when a company is already facing consistent financial losses, every new refinancing begins to look less like confidence and more like survival. As of 2024, interest costs consumed much of the operating profit needed to service the debt, leaving Corinthia with less room for error and even fewer ways to absorb another shock.
The picture is not simply of an ambitious hotel group temporarily carrying high debt, but of a company that has spent years losing money, cutting dividends and staff, borrowing to keep expanding, and relying on asset revaluations to stay afloat.
