Macdonald Hotels & Resorts back in the red as cost increases bite

Macdonald Hotels & Resorts slumped back into the red during its latest financial year as it battled a rise in its costs.

The group, which is headquartered in East Kilbride, Scotland, has reported a pre-tax loss of £3.5m for the year to 28, September, 2023, after having posted a pre-tax profit of £44.5m in the prior 12 months.

Macdonald Hotels’ profit was boosted in 2022 after the sale of its Holyrood and Manchester hotels for a total of £45.8m.

The last time the group reported a pre-tax loss of the £5.7m it posted for the year to 30 September, 2021.

Newly-filed accounts with Companies House also show that its turnover increased from £121.9m to £128.8m over the same period.

Macdonald Hotels, which operates 27 hotels and nine resorts, said its sales growth was predominately a result of increased occupancy across its locations.

In February 2023, the group completed the sale of its Macdonald Ansty Hall Hotel for £8.3m which resulted in a profit of £1m.

The group’s pre-tax profit from its hotels edged up from £7.4m to £7.9m in the year but fell from £2.7m to £1.5m for its resorts.

Its turnover from its hotels also rose from £103.4m to £108.9m and from £18.4m to £19.9m for its resorts.

However, its pre-tax loss on corporate and other activities widened from £6.8m to £10.7m.

National Minimum Wage increases hit Macdonald Hotels

A statement signed off by the board said: “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.

“While electricity and gas consumption reduced by seven per cent in the period, the cost of utilities increased by over 10 per cent due to increased pricing.

“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.

“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.”

During the year the average number of people employed by the group increased from 2,482 to 2,709.

The accounts for Macdonald Hotels were filed with Companies House more than two months later than the deadline.

Its results for its financial year to September 2024 are due to be filed before the end of June 2025.