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Family-run Arran hotel and spa sees huge profits rise

THE family-owned Auchrannie hotel and spa resort on Arran has reported a hike in pre-tax profits to £200,014 in its last financial year, from £33,406, and is on course to almost double earnings to nearly £400,000 in the current 12 months to March.

Auchrannie, ranked as the UK's number one family hotel by TripAdvisor, is enjoying a strong financial performance as it invests for the future.
Auchrannie, ranked as the UK's number one family hotel by TripAdvisor, is enjoying a strong financial performance as it invests for the future.

The jump in profits at the family business in the year to March 31, 2013 is revealed in the latest accounts of main trading company Auchrannie Leisure, which have just become available from Companies House.

Auchrannie enjoyed a hike in its occupancy rate in the 12 months to March 2013 to slightly more than 80%, from about 70% in the prior financial year, company accountant Colin Morrison said.

He added that the occupancy rate so far in the current financial year to March was running at "just under 90%". While acknowledging this might fall slightly because the January to March period tended to be a quieter quarter, he declared that occupancy over the current financial year as a whole would be higher than in the 12 months to March 2013.

And, revealing expectations of another hike in profits this financial year, he said: "At the moment, our forecast is for them (profits) to nearly double...We are looking at certainly being close to £400,000. That is with us being nine months in. Obviously, our forecast for January to March takes into account it is the quieter period."

Mr Morrison highlighted the boost to trading from a new revenue management system.

He said this had allowed the business, which includes the 28-bedroom Auchrannie House Hotel and 36-bedroom Spa Resort, to manage its room stock and pricing much more pro-actively.

Auchrannie, which is owned by the Johnston family, now sometimes changes its pricing several times per day, according to the pattern of incoming forward bookings.

Mr Morrison said: "When it is looking quiet, we can put out an offer and get people in. Once people are in the resort, they spend in the restaurants and bars as well. It is a win-win for us to have people here."

The rise in profits in the year to March 2013, on the back of a rise in turnover from £4.44 million to £4.7m, followed a fall in earnings in the prior 12 months. It took pre-tax profits significantly above the underlying level achieved in the year to March 2011.

Auchrannie, which won the Commitment to the Community category in The Herald's latest Scottish Family Business Awards, expects to raise its workforce as a result of a 20-bedroom extension to the Spa Resort. This is now due to be completed by the end of June, with Mr Morrison noting the project had taken "a little bit longer" than had been thought.

Mr Morrison said that the extension, for which Auchrannie has secured finance from existing banker Royal Bank of Scotland and grant funding from economic development agency Highlands & Islands Enterprise, would create 10 to 15 jobs.

He added that this would take Auchrannie's peak workforce to about 165 this summer.

Mr Morrison noted Auchrannie currently employed a core workforce of about 120. He highlighted the fact that the core workforce had grown because of increased occupancy levels in the winter.

Auchrannie has over the years made a point of maintaining a sizeable core workforce during the winter months to retain experienced staff who are familiar with the business, and thus ensure it maintains its standard of service.

Mr Morrison highlighted the strength of forward bookings, looking ahead to May and June.

He said: "They are very strong at the moment, compared with where they were this time last year...We are very pleased with trading." Auchrannie, which also has luxury lodges, has been built up by the Johnstons over the last 25 years.

Mr Morrison said that Auchrannie's revenue from hotel accommodation in the year to March 2013 had been up 12% on the prior 12 months.

He added that this had been driven by higher occupancy, with average room prices similar. Food and beverage revenues rose 10% in the year to March 2013.

He cited the rewards of recent significant investment in Auchrannie's spa facilities. He noted "Aspa" had enjoyed higher levels of demand than anticipated in the summer months.

Mr Morrison highlighted Auchrannie's acquisition, completed on November 1, of the Arran Adventure Company from trans-Atlantic rower Calum McNicol and Bob Hastings. Auchrannie is investing in new facilities for the Arran Adventure Company, which was already located at the resort.

Mr Morrison noted Auchrannie had been ranked as the number one family hotel in the UK by TripAdvisor last year.

Reflecting on the reasons for Auchrannie's strong financial performance, Mr Morrison said: "The revenue management (system) has certainly helped us improve our occupancy. I think people are possibly beginning to spend a little bit more."

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