Macdonald Hotels looking to golf and spa sectors for growth

The Bathgate-based firm, whose hotels include the Cardrona hotel and golf course in Peebles and Houstoun House near Broxburn, is seeking to improve its spa, restaurant and golf offering in particular amid expectations this year will prove even tougher than 2010 for the hospitality industry.

Next month it is due to complete a 4m spa and swimming pool facility at the Inchyra Hotel in Polmont and it plans to re-launch its golf holidays later this year as it seeks to persuade visitors to spend more during their stay. It is also introducing initiatives such as a "Scottish steak club" to attract locals into its hotel restaurants.

Although parts of the industry such as short-breaks and spa weekends are trading well, the firm, which was floated in 1996 only to be returned to private ownership in 2003, said the more lucrative activities, such as conferences and corporate hospitality, have failed to recover from the recession.Chief executive David Guile admitted that 2011 is already proving to be more difficult than last year.

"It is more challenging. These last few months - the rise in VAT in January and lots of cuts in public spending - is making us review again our spending in terms of sales efficiencies, value for money and initiatives," he told Scotland on Sunday.

"The spa is definitely a growing market segment for us. We're up over 20 per cent on our spas."

Guile said that despite the tough conditions, he still expects to grow the business during its current financial year, which ends in September.

Although 2010 accounts will not be published until the end of this year, he said the private firm increased profits 10 per cent in the 12 months to September 2010, while sales were up 4 per cent.

In 2009, the firm returned a pre-tax profit of 5.2m after slumping to a 9.4m loss the previous year, when it was forced to lay off 150-200 full-time employees.

"The short stay market should be very strong again, we believe there will be fewer people going on their two- week package holiday. We're seeing the conference market slowly coming back but it's very inconsistent and that's one area we are working hard on," he said.

Macdonald Hotels, which was founded in 1990 by Scots businessman Donald Macdonald, is hoping 2012 will be a watershed year for the industry as all parts of the country benefit from the London 2012 Olympics.

Last autumn, Lloyds Banking Group confirmed a new 340m debt facility for Macdonald Hotels, ending months of uncertainty. It had been rumoured that the bank may try to offload its stake in the group.