Macdonald Hotels has slashed its debts by almost £100 million as it continues to reap the benefits of investment in its estate.
The UK’s largest independent hotel group, which the Macdonald family owns 90 per cent of, saw sales rise by 7 per cent to £155.7m in the year to 2 April although higher interest charges saw pre-tax profits fall by £928,000 to £2.7m.
Major events including The Ryder Cup, Commonwealth Games, Open Golf Championship and the Farnborough Air show boosted occupancy levels across many of its hotels.
Momentum has continued in the current year with like-for-like sales and profits up by 6 per cent and 7 per cent respectively.
The group said it was seeing growth from both commercial and leisure customers, with occupancy up by 3 per cent and average room rates up by 5 per cent. It said on both measures, it was outstripping the wider industry by 2 per cent.
The effective reduction of bank debt by over £96m came after the first payment from the £58m sale of land at the Botley Park Hotel, Southampton to developers was received together with repayments made from cashflow and the sale of the Marine Hotel, North Berwick and the Old England Hotel, Windermere.
The reduction leaves the firm, which has 55 hotels and resorts in the UK, Ireland, Portugal and Spain, with a facility of £193.6m and £2.5m revolving credit, compared to debt levels of over £700m following its privatisation in 2003.
Gordon Fraser, deputy chairman and group finance director, said he was keen to see debt levels reduce further to £150m by 2018 when its current facilities end which would lower interest charges and also lessen the impact on the firm of future rate rises.
Fraser added the introduction of the national living wage next year will cost it around £1.1m a year but he believed it would be a positive step for the industry as a whole.