THE hotel group best known for its Crieff Hydro resort has hiked profits by more than 20 per cent - despite its financial year coinciding with the first fall in international visitors to the UK in eight years.

But it warned Brexit uncertainty could make staff recruitment challenges even “more critical” in the current year, given the group’s dependency on employing people from countries within the European Union (EU).

The company, whose six hotels include Peebles Hydro and the Ballachulish and Isles of Glencoe hotels in the west Highlands, made a profit before tax of £1.2 million for the year ended February 28, up from £980,781 last time. Revenue climbed to £31.2m from £29.8m, according to accounts filed at Companies House yesterday.

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Figures from VisitBritain show the number of inbound visitors fell by 3% to 37.9 million in 2017, while spending fell by 7% to £22.9bn.

Writing in Crieff Hydro Limited’s latest accounts, chief executive Stephen Leckie said: “During 2018, the UK experienced its first decrease in overseas visitor numbers in eight years. However, despite an increase in room supply (over 1,500 rooms added in Edinburgh and Glasgow alone last year) and continued uncertainties surrounding Brexit, the hotel market in Scotland showed some resilience and, in some areas, has been boosted by domestic tourism. This continued demand created some opportunity for revenue growth for the group, in part offset by the level of new rooms supply in the market.”

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Mr Leckie said revenue has continued to climb in the firm’s current year, and was up 6% in the first six months, putting it on track to turn over £35m. But he warned the “increasing cost of doing business” – from food and energy prices to the National Living Wage, Apprenticeship Levy and business rates – is likely to mean that the group will “make less money”.

Meanwhile, Mr Leckie said the company was finding it increasingly difficult to recruit staff even before Brexit, which will hinder its ability to bring in talent from within the EU. The company, which employs around 1,000 staff, currently has around 55 vacancies across its hotels, and efforts are being made to entice potential employees by providing a range of training opportunities, flexible working and “making it a fun place to live and work” through initiatives such as gin tastings.

Mr Leckie admits that, while many people enjoy visiting the west coast, it can be hard to persuade workers to relocate from the cities and across Europe to the area. Recruitment efforts are hindered by factors such as poor wi-fi provision and long winters.

“And we offer live-in accommodation, which is really expensive,” Mr Leckie said. “Finding staff, out on] west coast especially, is the biggest challenge.”

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Mr Leckie, who is the chairman of the Scottish Tourism Alliance, flags in the accounts the constraints on labour supply sparked by Brexit uncertainty. He writes that the group expects this to continue and “possibly become more critical”, adding that there is a “chronic under-supply” of specialists such as chefs.

The firm currently has staff of 22 different nationalities on its books.

Asked whether he has seen a reduction in job applications from countries within the EU, Mr Leckie replied: “They don’t say as much, but they vote with their feet. They are not applying for jobs, that is where we are feeling it. Once they are here, they are fine, but they are not actually applying for the jobs.”

Mr Leckie notes in the accounts that the period saw the company invest heavily in refurbishments and new facilities. Capital spend on the firm’s Crieff Hydro and Murraypark Hotels in Crieff reached £1.3m, compared with £1.1m the year before, with nearly £590,000 invested in the Peebles Hydro and sister Park Hotel in the Borders, down from £752,634.

Mr Leckie revealed the firm was likely to make around £3m of capital investment this year. Some £300,000 has been invested in developing its 1881 Gin School and Distillery in Peebles, on course to open in the autumn after a licence was secured from HMRC. Other developments include a new children’s fort activity area for two to 12 year olds, on ground formerly occupied by Crieff Hydro’s golf course.