De Vere profits boost for bid defence
De Vere Group, currently embrolied in a bid battle with a major investor, has reported a near 30% increase in pre-tax profits for the six months to 28 March.
Pre-tax profit, before exceptionals, rose by 28.3% to £19.3m, against £15m at the same point last year.
Turnover increased by 2.8% to £154.4m, up from £150.2m last year.
At the group's De Vere-branded hotels, turnover increased by 2.5% to £88.4m (2003: £86.2m). Operating profit before exceptionals was £15.1m (2003: £14.1m), an increase of 7%.
The first quarter of the financial year had been "mixed" for the chain, especially in the conference sector. But things improved in the second quarter.
Like-for-like revenue per available room (revpar) over the six months was up by 2.2% to £58.42. This was largely thanks to average room rates, which grew by 3% to £82.36, while occupancy dipped very slightly.
Work is scheduled to start in May on a new 96-lodge timeshare and golf course developement at De Vere Cameron House in Scotland. A 35-bedroom extension will also be added to the hotel.
De Vere said it had identified development opportunities at seven other De Vere properties, many of them for bedroom extensions.
A the group's Village Hotels and Leisure clubs, turnover rose by 2% to £37.2m (2003: £36.5m).
Operating profit before exceptionals increased by 7.1% to £7.4m (2003: £6.9m).
Like-for-like occupancy increased by 1.1 percentage points to 79.7%.
Average room rates were up by 4.6% to £54.26, largely thanks to an increase in the number of corporate customers relative to leisure guests, resulting in a revpar increase of 6.2% to £43.24.
De Vere said its strategy was to develop the group's brands to drive customer loyalty and further increase revpar in relation to its competitors.
At the same time it is improving operational systems and processes in order to cut costs.
At the De Vere chain it is looking to further develop existing hotels, while looking for routes to expand that do not involve forking out too much capital, for example through management contracts.
But it will also sell off individual De Vere hotels where it does not think it can achieve acceptable returns.
At Village, the group aims to speed up expansion to four our five new hotels a year. It is also selling four underachieving hotels and has carried out a review of the way new hotels are built, an initiative expected to save about £2m per hotel.
Since the end of the half-year period group turnover has risen by 4.6%. At De Vere, sales increased by 3.8% and like-for-like revpar was up by 1.5%
Village Hotels saw total sales up by 2.2% and like for like revpar up by 9% during April.
Also today, De Vere posted its formal defence to the offer from investor GPG, which is trying to gain control of a 35% stake in the hotel group and force the sell-off of the De Vere chain.
De Vere repeated its assertion that a detailed site-by-site review of the De Vere Hotels portfolio, coupled with a drive to improve returns, was better than the "one-size-fits-all" plan from GPG.
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