Gleneagles upbeat despite slipping into red as clients tighten belts

GLENEAGLES Hotel has slumped to its first pre-tax loss in at least five years as corporate clients continued to cut back on their spending at the exclusive hotel and golf course.

The five-star establishment - which is owned by Diageo, Scotland's biggest whisky producer - swung to a loss of 745,000 in the year to 30 June, compared with a profit of 2.5 million in the previous 12 months, according to accounts filed at Companies House.

The pre-tax profit figure in 2009 had been boosted by 3m in interest payments from loans to other companies in the group, which wasn't repeated last year.

Operating losses at the resort, which is due to host golf's Ryder Cup in 2014, widened from 554,000 to 780,000. Turnover fell by 5 per cent to 33.7m as leisure customers also cut back on their spending at the 232-room Perthshire hotel, which has held a full five red-star rating from the AA since 1986.

Chief executive Patrick Elsmie said the performance had been in line with expectations "after taking into account the impact of the economic downturn on the leisure market".

He said: "In the current financial year, we have been encouraged at early signs of returning consumer and corporate confidence, but this remains fragile.

"As economic certainty returns, we are confident that growth will be restored as we build towards 2014."

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

The total pay package for Gleneagles' directors jumped from 513,000 to 751,000, with Peter Lederer - the chairman and highest-paid director - taking home 303,000, up from 209,477 in 2009.

Elsmie said the reward targets for 2010 had been set to reflect the economic downturn and had been "partially achieved", including a rise in cash-flow from operations, after all capital expenditure, from 2.3m to 2.7m.

The company's headcount rose from 682 in 2009 to 757 in 2010, but the wage bill was flat at about 12m. Financial director David Kemp said there had been a continuing shift from full-time to part-time employment for some staff, with a higher number of workers putting in fewer hours each, raising the headcount but not the salary bill.

Gleneagles, which hosted the G8 summit of world political leaders in 2005, yesterday confirmed that work on the 2.5m refurbishment of its Dormy golf clubhouse had been put on hold after asbestos was found in a roof cavity. A spokesman said the hotel was awaiting advice from the Health & Safety Executive, which is expected tomorrow.

Gleneagles was built in 1924 by the Caledonian Railway Company and was nationalised with the railway system in 1948.The hotel was re-privatised in 1981 and bought by distiller Bell's in the mid-1980s, before passing into the hands of Diageo in 1997, following the merger of Guinness and Grand Metropolitan.