Macdonald Hotels has announced its results for the year ended 27 March 2014 and reported a continued improvement in its trading performance and financial position.
Group turnover of £145.5m (£138.6m) was up 5% delivering a 29% increase in the Group reported profit before exceptional items to £4.2m (£3.3m).
Gordon Fraser, deputy chairman and group finance director commented:
“Hotel sales increased over the year by 5% with growth from both the leisure and commercial segments driven primarily by a 4 percentage point growth in occupancy. This, combined with a higher conversion of our sales to profit through continued cost efficiencies, resulted in a 7% increase in hotel operating profit.
Investment
“During the year we invested over £14m in capital projects that included major refurbishments at the Macdonald Holyrood Hotel, Edinburgh, the Macdonald Forest Hills Hotel, the Trossachs and the Macdonald Highlands Hotel, Aviemore. Trading performance at our Aviemore Resort again improved with sales up 5% (£9.96m) and resort operating profit up 10%.
“In addition we completed a £1m investment to enable us to offer free Wi-Fi to our guests, provided by The Cloud, a BSkyB company.
Banking and debt reduction
“The 5 year banking facility signed in March 2014 with Lloyds Banking Group which includes a £70m capital expenditure facility, marked another significant milestone for Macdonald Hotels and provides even greater financial stability for the Group and enables further substantial revenue enhancing capital investment in the estate and to reposition more hotels into the AA 4 red star and 5 star quality categories.
“We plan to significantly reduce our debt during the 5 year term of our current banking facility:
- The sale of a 200 acre brown field site in Hampshire, which has planning permission for 1,500 houses, will realise over £60m in profit and cash which will go towards debt reduction.
- We are further evaluating the potential of our ‘non-hotel’ assets throughout the estate to further substantially reduce our debt.
“The continued strong trading performance, our substantial continued investment in the estate, the good headroom on our £300m banking facility and our ability to reduce our debt continue to underline the financial strength of the business.
Awards
“These results continue to be underpinned by our commitment to enhancing the quality of our service to our customers through investing in our people and continually improving the quality of our product. This was recognised by the award of the AA Hotel Group of the Year 2013/14, the second such award in 7 years. We also received gold awards for our conference offering from BDRC for the Macdonald Manchester Hotel and the Macdonald Burlington Hotel, Birmingham and we were voted the most improved brand in the meetings market by BDRC.
“We now have 46 AA Rosettes in our restaurants with the Macdonald Randolph achieving its third AA Rosette this year. We are very proud that Jamie Scott, Sous Chef, at the 3 AA Rosette Rocca Restaurant at the Macdonald Rusacks Hotel has just won the BBC professional Master Chef title.
“It is also important to our Board that we not only continue but increase our corporate and social responsibility activities.”
Sales growth
Commenting on hotels’ current trading Gordon Fraser stated:
“We have achieved further sales and profit growth of 5% and 8% respectively in the 8 months to November 2014 and I expect this to continue to the year end. There has been growth in both the conference and leisure segments, the latter due in the main to a number of major events including the Farnborough Air Show, the Open Golf Championship, the Ryder Cup and the Commonwealth Games.
“Our expenditure to date on capital projects is tracking that of last year with a further £9m invested in upgrading the hotel estate including projects at the Macdonald Holyrood Hotel, Edinburgh with the completion of the 91 bedroom and leisure and spa refurbishment and the new Rocca restaurant and the new £1.4m leisure club and spa at the Macdonald Craxton Wood Hotel, Chester.
“The 98 bedroom refurbishment of the Macdonald Aviemore Highlands Hotel was completed along with the new children’s facility which has already proved to be a great success. We are currently completely refurbishing the Macdonald Aviemore Inn and the Macdonald Academy Hotel which will bring the total invested in the Macdonald Aviemore Resort to over £5m over the last 2 years in creating an international high quality leisure and conference destination in the heart of the Highlands with conference facilities and overnight accommodation for over 1,000 guests.”
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