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Portland checks out acquisitions south of Border

EDINBURGH-based Portland Hotels has revealed it is eyeing acquisitions south of the Border as improving conditions in the hotel industry helped it hike pre-tax profits by 20 per cent.

Privately-owned Portland, whose portfolio includes Glasgow's Pond Hotel and the Huntingtower Hotel in Perth, said it is "actively seeking suitable investment opportunities" on the back of strong trading in the year ended January 26.

Profits before tax increased six-fold to £2.6 million amid a 5.5 per cent increase in room yield to £52.68 and as room occupancy edged up to nearly 80 per cent.

Turnover for the firm, which also owns Edinburgh City Hotel, Edinburgh Capital Hotel and Aberdeen's Speedbird Inn, rose by 4.5 per cent to £15.52 million.

Founder Colin Paton said Portland was looking to manage risk by acquiring hotels in England and Wales.

Any such deal would mark the company's first foray south of the Border, but Mr Paton emphasised the strategy was not connected to the forthcoming poll on Scottish independence.

He said: "The company sits on a certain amount of cash, so we are in a position that we can readily raise senior debt.

"There are a number of banks who are very keen to work with us that we have trading relationships with. It's all down to finding acquisitions that are sensible in a strategic and valuation context.

"We have been bidding for properties in Manchester and Cardiff. That's a couple of cities that I can tell you would interest us, as would Oxford and Bristol.

"We have identified cities that are of interest to us, and we have the ability to do deals and acquire assets that we can squeeze the performance on by imposing our management regime that works very well."

Portland continued to develop its properties and operations over the period. Mr Paton noted the latest spend takes its total capital expenditure for the past 10 years to £8.6 million, excluding acquisitions, during which time it has delivered continual profit growth.

He explained: "The hotel business is a fairly multi-faceted business because it involves things like e-commerce, real estate, investment in the real estate and it hugely involves people.

"We have managed to get a lot of things working very well during the course of the last year. You could say the stars have been a little bit aligned and it has produced a great result.

"But it's not as if you get things working that way overnight. It's really a result of many years of hard work by a lot of people in our executive team and throughout the units."

The company said it was looking forward to "brisk" trade this summer on the back of the Commonwealth Games, Ryder Cup and Year of Homecoming.

However, it tempered its outlook against an "inevitable" rise in interest rates and the impact from the strengthening pound. Mr Paton said "things are a lot better" with the UK economy, but added that "we are not out of the woods yet".

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