CRIEFF Hydro, the hospitality company behind the eponymous Perthshire resort and other Scottish hotels, has cited pressure from political and economic factors as profits dipped in its most recent financial year.

The 150-year-old firm, whose portfolio includes Peebles Hydro and the Ballachulish Hotel, highlighted the impact of rising wage and business rates costs, alongside heavy investment in staff and upgrading its hotels, as it booked a trading profit of £411,575 before tax for the year ended February 28. The family-owned firm had made a trading profit of £502,211 the year before.

Chief executive Stephen Leckie said the group, which owns six hotels and manages a further four, had performed satisfactorily amid a “tough year” for the Scottish tourism and hospitality industry, with turnover climbing to £27.1 million from £24.3m.

The period saw the firm continue to grapple with the effects of the oil and gas industry downturn on conference business, with the benefits to tourism from the weakness of sterling since the Brexit vote offset by the higher supplier costs the exchange rate shift has brought.

Mr Leckie also cited the cost impact on profits from increases in the National Living Wage (NLW) and the minimum wage, which are due to go up further following this week’s Budget.

Responding directly to the Budget, which will result in the NLW rise 4.4 per cent to £7.83 from April and increases in the minimum wage, Mr Leckie said that if his company was forced to increase pay by that level across the board “we would fail, it is as simple as that.”

Mr Leckie, whose firm employs around 1,200 staff, added: “It is unsustainable [and] way above inflation. And there is no offset for living out in the country, for staff accommodation, for staff meals on duty, for uniforms – that is one of our problems with it.”

The latest accounts for Crieff Hydro show that company continued to invest heavily in capital expenditure during the period. More than £1m was invested in Crieff Hydro and its sister Murraypark hotel, and £1.4m in Peebles Hydro which was acquired alongside the Park Hotel in the Borders town in a £10m deal in early 2014. Mr Leckie noted that 90 per cent of the 132 bedrooms at Peebles Hydro have now been refurbished, as well as the public areas. “Peebles is in great shape,” he said. “It is now trading really well.”

As the fifth generation of the Leckie family to lead the business, which is understood to be Scotland’s oldest trading company, Mr Leckie said he has a responsibility to ensure the investment continues. That covers expenditure on staff training, hotel buildings and the services and activities the resorts offer.

“This business is about sustainability,” he said. “My job, in part, is to make sure we are still here in five, 10 years’ time. We must not lose that trust by stopping spending in the bad years.”

Meanwhile, asked whether the nascent recovery in oil prices has helped conference business, Mr Leckie said. “It has come back a bit, but Aberdeen hoteliers won’t tell you it is a boom time.

“It is the new norm – it is not what it used to be.”