Macdonald Hotels sees £78m of strategic disposals offset Covid challenges

The latest annual results lodged by Macdonald Hotels show it benefitted from a strategic disposal programme which raised £78m, enabling the business to post annual profits of £29.2m for the year to 1 October 2020, despite the Covid pandemic.

The group sold four of its hotels: (the Rusacks hotel in St Andrews, the lease of the Randolph hotel in Oxford, the Swan hotel in Grasmere and the Loch Rannoch hotel in Perthshire), which resulted in a positive operating cash flow of £64m and further reducing borrowings from £195m to £125m.

Net bank debt, following the sale of its Holyrood and Manchester hotels, was £28m, the lowest since the company was taken back into private ownership in 2003.

Despite a like-for-like operating loss of £36.9m for the 53 weeks to 1 October 2020, compared to a profit of £16.2m for the 18 months to September 2019, chairman Gordon Fraser said the disposal strategy had left the business in the “strongest financial position of the past two decades.”

The group posted a £29.2m profit on a turnover of £76m for the year, compared to a £702,000 loss on a turnover of £237m for the 18 months to September 2019.

Fraser said: “The fact that our long-term strategy has enabled us to emerge stronger, with dramatically reduced debts and in a position to reinvest far more substantially in our properties than we have done for almost two decades, is a source of enormous pride and speaks to the dedication and talent of our entire workforce.”

Macdonald Hotels’ banking facility runs to 30 June 2022 and refinancing discussions have commenced to allow the group to invest in its remaining portfolio including 28 hotels and nine resorts.

Fraser announced plans to embark on the group's "largest reinvestment and refurbishment programme since 2003" following refinancing.

He added: “We are encouraged by strong trading hotel performance at the beginning of 2022, with the trend towards staycations increasing the demand for hotel occupancy at improved room rates. With our major reinvestment programme, this is a trend we hope to maintain and accelerate in the year ahead.”

Despite this, the group's filings said there was “as yet no certainty as to when business will recover to pre-Covid levels”.