MACDONALD Hotels has returned to the black after ramping up investment to raise the quality of its estate in its latest financial year.
Bathgate-based MacDonald, founded and run by Donald Macdonald, turned a £6.5 million loss into pre-tax profits of £3.6m, accounts newly filed at Companies House reveal.
The accounts show the company reported a seven per cent rise in hotel operating profit in the year ended March 27, driven by a four per cent increase in occupancy.
And the momentum has carried into this financial year, thanks partly to the Commonwealth Games and Ryder Cup.
Occupancy is running higher in the current year, while sales and profits have grown at five per cent and eight per cent in the eight months to November, the company reports. This has come as room rates have increased by five per cent.
The accounts show profits grew as Macdonald invested £14.3m in capital refurbishments, powered by a £70m, five-year facility with Lloyds Banking Group.
Projects included the redevelopment of the MacDonald Holyrood Hotel in Edinburgh and the refurbishment of the Macdonald Aviemore Highland Resort.
Work also continued on the upgrade of the Macdonald Forest Hills Hotel in Aberfoyle.
Deputy chairman and finance director Gordon Fraser said: "It's an exciting time for the company, for the staff and all those involved. The five-year facility we got a year ago has really given us the foundation to create the value in the company.
"What we are now concentrating on is carrying on and increasing the investment programme in the hotels, not just to refurbish but to improve the quality and bring the quality up.
"We currently have two five-star and two AA 4 Red star hotels - we want to bring that up four-fold in at least in the next couple of years, and that does require the investment we are making now."
The accounts show turnover at Macdonald grew to £145.5m from £138.6m the year before. The profit before exceptional figure climbed to £4.2m from £3.3m, with the directors stating a number of exceptional items featured in its last two sets of accounts.
Asked to gauge consumer confidence, Mr Fraser said sentiment varied around the country but was strong in Scotland over the year. This was notable on leisure travel, he said, which showed the strongest growth over the period.
The leisure market accounts for 50 per cent of business at Macdonald, with commercial and conference activity providing the balance.
Mr Fraser said the Commonwealth Games and Ryder Cup had brought in extra £500,000 in sales and £250,000 in profits.
But at the same time he underscored the importance of commercial and conference activity to the hotels, which he declared will be the "big opportunity" this year and next. Macdonald, which owns 39 of the 51 hotels and resorts it runs, pledged to reduce debt over the course of its five-year facility with Lloyds. It stood at £320.4m at March 27, having been £313.3m last year.
And it said capital expenditure has continued in the current year, with £9m invested so far. The focus remains on upgrading existing stock, which Mr Fraser said offers a better prospect of return compared with acquiring or building new hotels.
Funds have been set aside to invest in three major IT projects this year, including a move to unify its systems under a single server. This will allow it to collect data centrally which will in turn be used to improve customer service, Mr Fraser said.
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