Macdonald Hotels has hailed a boost in underlying profit and revealed it is in “advanced negotiations” on joint ventures with housebuilders to use its vast land bank.
The group, which has 55 hotels and resorts in the UK, Ireland, Spain and Portugal, is evaluating opportunities for residential housing projects in areas including Aviemore, Manchester and Ascot.
Gordon Fraser, deputy chairman and group finance director, said the company has already rejected offers worth in the region of £30 million for its land as it did not want to sell "the family silver".
He said: “Our preferred route is to enter into joint venture partnerships with developers. It then allows us to maximise the income and give us a share of the development profit as well.”
Macdonald said its turnover grew seven per cent from £145.5m to £155.7m in the 12 months to April 2 boosted by events such as The Ryder Cup, Commonwealth Games, The Open and the Farnborough Air Show.
Operating profit rose 11 per cent from £15.3m to £16.9m.
Pre-tax profit dipped from £3.63m to £2.7m which the company said was mainly because of higher interest charges as a result of the accounting treatment of a lease.
Ruaridh Macdonald, deputy chief executive, said major events had helped boost hotel sales and occupancy while the commercial, conference and leisure segments had also performed well.
Mr Macdonald said there had been a six per cent increase in average room rate during a year when the company spent around £16m on its estate.
That included refurbishing 261 bedrooms at the Aviemore Resort and effectively completing an 18-month revamp of the offering there.
The privately owned business also managed to shave around £96m off its net debt in its most recent financial year.
That was helped by the £58m sale of land at the Macdonald Botley Park Hotel, Southampton. The Macdonald Old England Hotel at Windermere and the Macdonald Marine Hotel in North Berwick were sold to business entities controlled by the Macdonald family. They continue to be run by Macdonald Hotels with the company having an option to buy them back.
Total net debt should stand at around £204m at the end of this calendar year, having been above £300m as recently as March.
The company plans to spend around £14m in its estate in the current financial year but is not looking to buy any more hotels.
Macdonald is also moving forward with extensions at The Rusacks in St Andrews, which overlooks the 18th green of The Old Course, and the Compleat Angler in Marlow.
The company employs around 4,000 and says the introduction of the Living Wage will cost it around £1.1m initially.
Mr Fraser said: "It is exactly the right thing to do for the industry to do. We think that will be beneficial for the staff for obvious reasons but will result in better service for the customer.
“Yes we will have to look at efficiencies and the customer will have to pay more through the room rate but we are not asking them to do that for nothing. Because of the investment in the estate we are giving the customer something better.”
Macdonald is also putting more into its apprenticeship programmes, with the Spa academy and chef academy, to train the next generation of hotel staff. The company said it has also started a scheme for other staff to reward outstanding performance.
Mr Fraser said: “We want to reward and retain these people so they can have a career at Macdonald Hotels.”
On current trading Mr Macdonald said: “We are continuing to perform strongly in the current year.”
Like-for-like sales are said to be six per cent up with profits seven per cent ahead. Occupancy and average room rates have also increased.
Macdonald is owned by its executives with founder Donald Macdonald and his family trust the principal shareholder.
Lloyds Banking Group agreed to convert its shares into loan notes as part of a re-financing last year.
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