LOSSES deepened at the company behind the famous Old Course Hotel in St Andrews last year - in spite of an increase in room occupancy and guest numbers, new accounts show.

The Old Course Limited, ultimately owned by Wisconsin-based Kohler Co, saw pre-tax losses reach £1.56 million in the 12 months to December 31, compared with £1.41m the year before.

The rise in losses came in spite of the hotel seeing a 2% jump in sales, driven by an increase in occupancy rates and the number of guests staying at the five-star hotel. Turnover edged up to £12.8m from £12.6m in 2011.

In accounts newly available at Companies House, the directors said the sales rise was offset by factors including costs linked to the redevelopment of the Hamilton Grand, the Victorian building overlooking the St Andrews links.

The company has embarked a long-term project to convert the building, adjacent to the Royal & Ancient (R&A) Clubhouse into 26 luxury apartments.

With prices starting at £1.35m, the project will include two, three and four-bedroom apartments, a penthouse with 360-degree views, a members' library and grill restaurant and bar open to the public.

The accounts measure the development work in progress at £27.6m, up on the £17.9m reported last year.

The directors said: "The delivery of this development in terms of redevelopment construction costs and the subsequent individual unit realisations will extend over a number of years."

In addition to absorbing costs linked to the Hamilton Grand, the Old Course Hotel saw the strides it made on occupancy and revenue offset by investment in sales and marketing activities.

Salaries and wages also rose "to service the increased occupancy at the industry's highest standards".

The accounts show the average number of persons employed in the hotel rose to 270 last year from 243 in 2011, and in administration roles to 29 from 27, with the cost of wages and salaries increasing to £4.71m from £4.62m.

Overall staff costs during the year for employees and directors, including social security and pension costs, jumped to £5.34m from the previous year's £5.11m.

Fees paid to directors were unchanged at £10,000.

Writing in the accounts, the directors said: "Competitive pressure in the UK and international resort markets are continuing risks for the company, particularly against the backdrop of the current economic climate.

"The company manages these risks by investing in superior quality products and services in an effort to distinguish itself from its competitors."

The directors also noted the financial support provided by Kohler Co "when required and in respect of major development projects".

They said this commitment, enshrined in a signed letter from Kohler Co indicating support for "at least 24 months" from the date the accounts were approved, means the company is "well placed to manage its business risks successfully despite the current uncertain economic outlook".