Gleneagles hit by drop in bookings

Published on Friday 10 April 2009 21:24

GLENEAGLES faces further financial fallout from the credit crunch after profits at the luxury hotel and golf resort halved last year.

Finance director David Kemp yesterday warned that a "significant" drop in corporate bookings would result in reduced profit and turnover in the current financial year.

He was speaking after accounts spanning the 12 months to 30 June, 2008 were filed with Companies House. They revealed that operating profits slumped to 1 million – down from just below 2m in 2007.

Despite the decline, Gleneagle's highest-paid director, likely to be chairman Peter Lederer, saw a bumper pay rise of almost 57 per cent to 287,000, against 183,000 a year earlier.

Turnover for the group, which is owned by drinks giant Diageo, grew to 38.2m in the year to the end of June, from 35.3m the previous year. The business, which encompasses the famous Perth-shire hotel, golf and leisure facilities and three restaurants, was hit by a sharp rise in operating costs – up to 37.2m from 33.3m, which came mainly from the opening of a new spa.

Andrew Fairlie's eponymous restaurant is operated as a separate business by the chef.

But Kemp said that stripping out the exceptional costs, profit would have been "on a par" with the previous year's figure. He said corporate bookings, which previously made up about 45 per cent of Gleneagles' business, had been hit by the credit crunch.

"Our corporate business, such as conferences, team meetings and so on, has been most affected," he said. "We would expect both our turnover and profits for the 12 months to 30 June, 2009 to be down on the previous year, but we are working really hard to provide really good packages to attract guests." Kemp added: "We are finding that the level of spend from our guests is slightly down, but it is not that significantly down."

He said the weak pound had kept foreign visitor numbers steady, especially from the US and Europe. Bottom-line profits in the 2006-7 and 2007-8 accounts were boosted by land disposals relating to ground to the north of the hotel. The pre-tax profit in 2007-8 was 11.1m, down from 14.7m last time.

Managing director Patrick Elsmie took over from Peter Lederer last November, when the latter became chairman. Kemp explained the former managing director's pay rise was due to a lower bonus the previous year, when targets set by parent company Diageo had not been met.

"The bonus criteria for 2007 was very tight and were not achieved, which is why the comparative pay for 2007 was lower. This year's targets have been substantially achieved."