A national hotel chain based in the North East has issued cautious guidance for the year ahead despite rising turnover and profits.
Newcastle鈥檚 Cairn Group - which is registered at Companies House as The Station Hotel (Newcastle) - reported turnover increasing from 拢93.9m to 拢96.5m in the year ending April 30, 2019. Operating profit, meanwhile, was up from 拢5.1m a year earlier to 拢7.7m.
The firm鈥檚 accounts note, however, that Ebitda fell 15% to 拢13.7m, and cite a number of rising costs which the company said it was not able to pass on entirely to customers.
The company also highlighted the effect of uncertainty in the economy, and reported that directors 鈥渄o not expect to report any significant increases in both group turnover and Ebitda in 2020鈥 as refurbishments continue on two of its key properties.
But it said it expected 鈥渞esults to be significantly enhanced in future years鈥 as two key refurbishment project are completed.
In the accounts, company director Aran Handa says: 鈥淭he year was challenging, with significant pressure on both sales and purchase pricing in the market.
鈥淧ressure on key costs (including wages, food and beverage purchasing, and utilities) was significant, and could not always be passed on to customers. Further, investment into two significant flagship assets began in the period and continued post year end. Other works were also ongoing in the same period.
鈥淪trategic analysis of the business and the expectation of the coming years gave rise to the directors drawing updated conclusions on the residual values and useful economic life of recent significant refurbishments and re-branding projects. On average, both residual value and useful economic life is expected to be greater than per previous assessments.鈥
The Cairn Group owns and runs hotels, bars and restaurants across the North East and beyond, including Newcastle鈥檚 Royal Station Hotel, Redworth Hall and Spa near Newton Aycliffe, and the Hilton Doubletree near Newcastle Airport.
The family firm, which has just under 1,500 employees, said its property portfolio was worth 拢338.3m at the year end, and this would rise to 拢371.6m when the two refurbishment projects were completed.
Last week Cairn Group was revealed as the preferred bidder to run a new hotel near Swansea鈥檚 indoor arena, and it is also working on the development of a Holiday Inn in Sunderland鈥檚 Keel Square.
