North East family property, care and leisure company Malhotra Group has highlighted continued investment across the company after a year in which revenues grew but profits fell.
The Newcastle business – which owns and operates a number of bars, restaurants and hotels including Grey Street Hotel, The Three Mile and The Runhead – has published accounts for the year ended March 31 2025, showing a 10% lift in turnover to £63.4m. Operating profit dropped 38% to £6.3m, and shareholders’ funds increased by 4.4% to £98.9m.
The group, which saw employee numbers rise from 1,367 to 1,473 in the year, highlighted a number of challenges affecting the wider economy which have impacted the group’s divisions, including staff recruitment and retention, rising costs and shifts in consumer trends.
However, it said its diversification was proving vital to strengthening the group for the future.
A report within the accounts said: “We continue to invest in a significant capital expansion programme across both the care and leisure sectors to continue to improve the quality of services across our business. The impact of the current economic environment has been partly mitigated due to holding well-diversified assets, including a portfolio of well invested care home facilities, a mix of leisure operations and geographically spread investment properties. This diversification remains key to the continuing success of our business.”
Within its care division, trading through the Prestwick Care brand, it operates 18 nursing and residential care home facilities with 1,019 beds across the region. Accounts show fee income rose by £7.6m to £53m.
It said the business “continues to face issues in relation to the employment market and the struggle to recruit and retain staff across the care sector with the exodus of people out of the Care sector to work in other fields to which the Group has not been immune. This remains an ongoing issue in the business.
“We continue to be enormously grateful to our staff for their hard work to provide high-quality care to our residents and their effort and dedication to provide a great contribution to the success of the care homes.”
This month, following the year end, the group has opened Bay View, a new 83 bedroom care home facility, following the conversion of the former Rex Hotel on Whitley Bay sea front.
Within its leisure division, it said demand had dropped following price increases introduced by the business to cover increasing wages, energy and raw materials.
It said it had also seen a shift in consumer spending behaviour, towards less spending on alcohol and a reduced spend per transaction. Revenue within the division fell to £8m from £8.2m.
It said a contract to let the New Northumbria Hotel to the Home Office ceased in January 2024 and that it is now currently closed for refurbishment.
At the year end it also took the decision to close popular bar and restaurant Leila Lily’s, adjoining its Grey Street Hotel, saying the decision “was directly influenced by the decision to increase both National Minimum Wages rates and employer National Insurance Contributions in the October 2024 Budget”.
The group also said it has decided, “in some instances”, to move away from being the sole operator of all trading activities at a leisure venue, and instead enter into arrangements with third parties to lease and operate part of its facilities, saying: “Our longer term strategy is to continue to invest in high quality assets although we will look to let these sites rather than operate them.”
The group added: “Despite the ongoing uncertainty arising from the cost of living crisis, the company continues to invest in its portfolio to ensure that it remains modern and attracts the required footfall. There is significant investment planned for the redevelopment of the New Northumbria Hotel, Jesmond, The Market Lane, Newcastle and Sandpiper, Whitley Bay.”
