COSTLEY & COSTLEY, the owner of Ayrshire’s Lochgreen and Brig O’Doon country house hotels, slipped into the red last year amid rising costs and increased competition across the hospitality sector.

The company, led by veteran hotelier and chef Bill Costley, made a loss before tax of £128,614 for the year ended September 30 as administrative expenses rose to £6.7 million from £6.2m, accounts newly filed at Companies House reveal.

It had made a pre-tax profit of £543,616 the year before, when trade was boosted across its outlets by virtue of The Open golf championship being held at neighbouring Royal Troon.

The loss for 2017 came as the company continued to invest heavily in developing its venues, which also include the Highgrove, Ellisland and Doonbrae house hotels, as well as gastro pubs Souter’s Inn and Cochrane Inn. Mr Costley, who began his career at the Caledonian Hotel in Ayr and attended cooking school in Versailles, writes in the accounts that the company spent £850,000 on capital projects over the period, in addition to £500,000 the year before. It took to £2m the overall investment made in its properties between 2015 and 2017.

The investment last year included the development of a new spa at the five-star Lochgreen venue, where further development is now planned. Mr Costley said he would like to add a swimming pool and a separate banqueting hall at the popular wedding destination in Troon.

Further refurbishment, meanwhile, is planned for the Brig O’Doon House Hotel in Alloway.

Writing in the accounts, Mr Costley highlights the challenge facing the hospitality sector from rising operational and commodity costs, as well as increased competition and growing customer expectations. While the company, which also manufactures its own ice-cream, chocolates, cakes, pastries and ready meals for selected retailers, increased turnover by 1.8% to £9.9m, its gross profit margin dipped by 1.8% to 69.3%.

Speaking exclusively to The Herald, Mr Costley said it is a challenging time for the hospitality industry, as evidenced by the growing number of high street operators which had either gone bust or scaled down their portfolios in the face of high rents. That has come as consumers increasingly favour casual eating out experiences over fine dining.

Mr Costley said: “Going back 20 years, it was much, much easier to make a business work than it is currently. [For] a lot of young ones going out to the theatre, the experience of the food is less important now. People are eating out more, but I think the décor and the ambience is more important than what is on the plate. People want that informality now.”

The collapse in the value sterling since the Brexit vote has brought some uplift to the hotelier, who has noticed a few more American visitors in the area.

But he noted: “It’s the industry generally that’s changing. Eating out is changing completely. “

Mr Costley said the firm, which he runs wife Cath and son Andrew, aims to cater for different consumer occasions by offering a variety of eating and drinking options across the estate.

And he said trading remained buoyant in its native Ayrshire, despite the growing competition on its doorstep. He said: “It is still quite positive. We are up in turnover on last year.

“The difficult thing now is to get to the bottom line, because the commodity costs now are just ridiculous.

“There is a culture now where people are just waiting on getting a voucher. If you resist that, it is quite difficult. Being good is not good enough – you have got to be brilliant. That’s what we try and do.”

The accounts show the company employed an average of 314 staff over the period, compared with 316 the year before. Payroll costs climbed to £4.4m from £4.1m, with directors’ remuneration dipping to £232,838 from £237,272.