Town House chief emerges from the 'dark days' in five-star style

Peter Taylor, chairman of the Town House Company hotel group, yesterday insisted his business had emerged "stronger but leaner" from one of the most difficult periods he has ever faced.

Financial results to be published by Companies House this week will show the Edinburgh-based firm has taken on considerable debt in order to complete the development of the new, five-star Blythswood Square hotel in Glasgow.

The project to transform the former RAC Club into a luxury hotel and spa was hit by a two-year delay due to the collapse of a wall during the construction phase, which added "substantial additional costs" to the project.

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As a result, Taylor was forced to sell three of the group's properties - Channings, The Howard, and a shared-ownership scheme, the Edinburgh Residence - at the end of last year as part of deal to seal a new, four-year extended lending agreement with Lloyds Banking Group.

Unlike other hotel and property owners, Taylor retains his majority ownership in the group and did not undertake a debt-for-equity swap with the bank.

The two hotel properties were sold to Palm Holdings, the owner of the Old Waverley Hotel on Princes Street in the capital, while the Edinburgh Residence was bought by Swiss time-share specialist Hapimag.

The net return following the sale of the three properties was about 9 million, a figure which Taylor said he was "not unhappy with, in the circumstances".

As a result, net debt of 32m in the group's accounts for the year to October has since been reduced to about 26m.

Taylor said the firm is pursuing a multi-million pound insurance claim as a result of the accident, and that "certain costs continue to be incurred", which will be subject to further claims. Although he admits to having had some "dark days", Taylor insists that he has "no regrets" about buying the abandoned RAC building in 2006 for 5m.

Blythswood Square, with over 100 rooms, makes Taylor's hotel group bigger by number of rooms than it was when he owned the four Edinburgh properties. The hotel became Glasgow's first five-star hotel as rated by the AA.

"A number of people told me it was a brave move in good times," said Taylor of his acquisition. "But I never wavered in my belief about the property - it is a wonderful trophy property and many of the big boys would love to get their hands on it.

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"You can never create something with that style and feel in a new build, no matter how much money you throw at it.

"There is something very special about the building and now it is proving to deliver."Taylor claimed the hotel and spa were outperforming the Glasgow market in terms of occupancy and average room rate, adding that it has sold 60,000 cocktails since November 2009.

He said that the group's remaining Edinburgh hotel, the Bonham, had "some difficult times" over the winter as the cold snap kept occupancy lower, but added that it was performing "comfortably ahead of budget".

The accounts will show that the group's turnover rose 61 per cent to 8.7m, which includes income from the parts of the business that were sold in December, as well as income from Blythswood, which was able to open its doors to the bar and restaurant and a limited number of rooms in November 2009.

The hotel became fully operational, including a new build section and the spa, in September.

The group returned an underlying profit of 109,000, although exceptional charges of 1.1m and bank charges of 2.3m pushed the firm into the red with pre-tax losses of 3.3m.