HOTEL group Crieff Hydro boosted turnover but saw a sharp fall in profits as overheads spiralled in its most recent financial year, new accounts show.
The Perthshire-based company, which owns and operates hotels in Crieff, Peebles, and the West Highlands, booked a pre-tax profit of £418,657 in the year ended February 28, 2023. This followed a profit of £3.1 million the year before, during which it was helped by a reduced rate of value-added tax and a business rates holiday under government measures to support the industry through the pandemic.
Profits fell last year as the hospitality operator saw turnover rise by 11% to £36.5m, which it said demonstrated the “continued strength in the Crieff Hydro brand”.
However, it also faced “significant increases in overheads”, with maintenance, utilities, and insurance costs rising to nearly £2m. Overall cost of sales rose to £19.8m from £15m, the accounts show.
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Despite pressure on the bottom line, the company said it re-invested £3m over the period to enhance facilities for its team and customers, as well as in its “continued digital transformation and other efficiencies to reduce costs and improve guest satisfaction in the future”.
And it diversified its operations with the acquisition in June last year of Perthshire-based Highland Safaris, a five-star visitor attraction and “natural extension of our activities business”.
The results include figures for Crieff Hydro Limited, which includes the Crieff Hydro and the Murraypark hotels, and the wider group taking in Peebles Hydro Hotel and The Park in the Borders town, Ballachulish Hotel, and the Isles of Glencoe Hotel. They also cover Crieff Hydro’s management company, which has been managing the Kingshouse Hotel in Glencoe.
Stephen Leckie, chairman and chief executive, said: “We knew that this would be a challenging year, but I’m pleased with the strong trading performance and the results of all the work the team has put in considering the pressures we have faced on all fronts.
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“Maintaining investment is the key to ongoing success through good times and bad and that has always been our focus. As we look ahead, we see continued uncertainty in trading conditions across the sector and the wider economy but continue to focus on our guests’ experience and the memories they make when they are with us.
“Our investment horizon broadens as we look to make the most of the latest technology and channel resources into reducing energy consumption on the journey to net zero.”
Addressing the outlook for the current financial year in the accounts, the company anticipated further increases in overheads, including utility costs and business rates, adding that a tight labour market and other inflationary factors would lead to a continuing focus on cost management.
“Revenue remains resilient with a post-Covid “rebound” in demand continuing both domestically and internationally creating opportunities for growth despite economic uncertainties,” Mr Leckie states in the accounts.
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“In practice this means the family and management team continue to innovate to reach high levels of customer and team satisfaction and pre-Covid levels of EBITDA (earnings before interest, tax, depreciation, and amortisation).
“Meanwhile we conserve cash in the business to facilitate continued re-investment that builds the long-term value of the group.”
The accounts show the company employed an average of 865 people in the year to February 28, up from 736 the prior year. Payroll costs increased to £15.7m from nearly £12m.
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