Classic Lodges, the upmarket hotel operation that is part of Trevor Hemmings's leisure empire, posted increased losses in the latest year despite recording a strong increase in turnover.

Classic Lodges, the upmarket hotel operation that is part of Trevor Hemmings's leisure empire, posted increased losses in the latest year despite recording a strong increase in turnover.

The former Cairn Hotels made a pre-tax loss of £1.6m in the year to March 27, compared with a loss of £1.3m in the previous year.

Turnover from an eight-strong portfolio of country hotels, which stretches from Berwick-upon-Tweed to Hickstead in Sussex, increased by 18% to £9.7m. The rise in losses was mainly due to a 27% increase in administrative expenses, to £4.9m, and a 21% rise in interest payable, to £2.2m.

Both may reflect the pressure that hotels were under during a period when many feared the sector could be hit by a predicted downturn in consumer spending after the housing market peaked last August. Market conditions have become more challenging in recent months.

In the company's accounts, filed at Companies House last week, directors wrote that the main uncertainties facing the business were "the level of economic activity, guest numbers and competition in the form of prevailing room rates". They believe these factors present opportunities as well as challenges.

Cairn Hotels was originally established to accommodate more than 30 hotels picked up from receiverships during the recession of the early 1990s.

In 2005 Trevor Hemmings, septuagenarian owner of Blackpool Tower and one-time Scottish & Newcastle director, passed operational control of Classic Lodges to his son Craig.