Land sale helps Macdonald Hotels to £55m profit

Gordon Fraser

Macdonald Hotels said the sale of land at one of its properties helped its finances in the year to March 31 during which it increased its profit after tax by £49.1 million to £55.2 million.

Macdonald said the profit, which followed the sale of land at the Macdonald Botley Park, Southampton, was supported by a strong trading performance. Total operating profit was up 5% to £17.7 million.

Macdonald, the UK’s largest independent hotel group with 55 hotels and resorts in the UK, Ireland, Spain and Portugal, said group turnover rose 5% to £163.4 million and bank core debt was reduced to £196 million.

It said it had now reduced its bank debt by over half a billion pounds since 2003.

Looking ahead, Macdonald said that like other hotel operators, it is expecting “significant” benefits from the Brexit vote with the weaker pound making the UK an attractive place for overseas visitors and encouraging more UK holidaymakers to opt for ‘staycations’.

Gordon Fraser, deputy chairman and managing director said: “We’re in the best shape ever and are quietly excited about the opportunities for further growth in the next few years.

“It’s been a tremendous combined effort by the workforce and the management team to put in such a strong, sustained performance while at the same time reducing our debts by half a billion pounds in just 13 years.”

Fraser said like-for-like hotel sales were up by 5% and hotel operating profit was up by 3%.

Increases across commercial, golf, spa and leisure segments resulted in a 1.5% growth in occupancy and a 2.4% increase in average room rate.

The group invested a further £13 million in its properties, including refurbishing 128 bedrooms at the Macdonald Randolph Hotel in Oxford, the completion of a major refurbishment of the Macdonald Aviemore Highland Resort — and a major bedroom refurbishment programme at the Macdonald Bath Spa Hotel.

In July 2015 the group completed the sale of land at Botley Park Golf Course to three developers — the main contributor to a gain on sale of assets of £57.2 million.

On current trading, Fraser said: “Growth in the commercial and conference segments has supported 5% increases in both like-for-like sales and profits.

“Although the group has had to restrict its capital investment programme this year, following the repayment of bank debt from cash flow of £18 million, we have already invested £4 million and have committed a further £3 million in capital projects in the current financial year.

“We are in the process of completing the bedroom refurbishment at the Macdonald Holyrood and we are completely remodelling the Macdonald Houstoun House and Macdonald Forest Hills, with the aim of achieving ‘4 Red Star’ rankings at each.”

Macdonald said the group’s “significant non-hotel assets” like development lan would also play a major role in strengthening its finances.

“We’ve agreed heads of terms for joint ventures worth more than £50 million with a further £40 million to follow, which will enable continued investment in our properties, our people and further debt reduction.”