Macdonald Hotels & Resorts has reported a pre-tax loss of £3.5m for the year ending 28 September 2023, a stark contrast to the pre-tax profit of £44.5m in the preceding 12 months.
The East Kilbride-based group’s previous year’s profits were significantly bolstered by the sale of its Holyrood and Manchester hotels for a total of £45.8m. The last time the company reported a pre-tax loss was in the year to 30 September 2021, when it posted a loss of £5.7m.
The latest accounts filed with Companies House reveal a turnover increase from £121.9m to £128.8m over the same period. Macdonald Hotels, which operates 27 hotels and nine resorts, attributed this sales growth primarily to increased occupancy across its locations. In February 2023, the group completed the sale of its Macdonald Ansty Hall Hotel for £8.3m, resulting in a profit of £1m. Pre-tax profit from its hotels rose slightly from £7.4m to £7.9m in the year, but fell from £2.7m to £1.5m for its resorts.
Turnover from its hotels increased from £103.4m to £108.9m, and from £18.4m to £19.9m for its resorts. However, the pre-tax loss on corporate and other activities widened from £6.8m to £10.7m.
The board of Macdonald Hotels indicated that rising costs, particularly in utilities and staff, posed significant challenges to profit conversion. They stated, ‘Rising costs in the period, particularly in utilities and staff costs, presented a challenge in terms of profit conversion, especially given that they represent the two main costs to the group on an annual basis.’
The increased National Minimum Wage also impacted the company’s financials. ‘This, coupled with a 10 per cent increase to [the] National Minimum Wage in April 2023, markedly increased the group’s cost base in the period,’ the board added.
Despite the challenges, the group has seen some improvement in the recent months. ‘Whilst [the] National Minimum Wage increased further in April 2024, the group has benefitted from a substantial reduction in gas and electricity prices as part of a newly negotiated fixed utility contract from April 2024. This reduction, coupled with our focus on further reducing consumption as part of our sustainability strategy, has helped to improve our trading result in the year to 26 September 2024.’
The company’s workforce grew from 2,482 to 2,709 during the year. The accounts were filed with Companies House over two months after the deadline, with the results for the financial year to September 2024 due to be filed by the end of June 2025.
Macdonald Hotels & Resorts faces significant financial challenges due to rising costs, despite efforts to increase occupancy and negotiate better utility rates. The group’s strategic efforts and sustainability initiatives may help mitigate some of these pressures moving forward.
