Britannia Hotels, the owner of 44 regional, mid-market hotels, has recorded a 69% fall in pre-tax profits, despite a 25% increase in turnover.
Sales at the group increased to nearly £70m during the year to 31 March 2013, from £55.7m the previous year, but profits before tax fell from £11.4m to £3.5m.
The company's annual report, lodged at Companies House, noted that the current economic climate has placed "additional demand" on the business, while operating costs had increased by around 90% on the previous year.
However, the directors said that in order to sustain and enhance Britannia's position in the market, they have "endeavoured to improve the standard of our product both in terms of facilities and levels of service", whilst retaining highly competitive prices.
"We are confident that the business is well placed in order to meet the challenges," they said.
Britannia Hotels was founded in 1976 by Alex Langsam with the acquisition of the 100-bedroom Country House Hotel in Manchester, which has since gone on to be extended to 255-bedrooms.
The company, which this year has added the Waterside Hotel in Peterhead, the Britannia Hotel in Edinburgh and the Carrington House Hotel in Bournemouth to its portfolio, intends to make further hotel acquisitions.