Leap in profit puts De Vere on front foot

Hotel group De Vere offered further defence to a hostile partial takeover bid last week, reporting quadrupled profits in the first half of its financial year.

The company, which is being urged by shareholder activist Guinness Peat Group (GPG) to sell off its De Vere-branded hotels, reported a 430% increase in pre-tax profit, to £18.9m in the six months ended 28 March, compared with the same period last year. Excluding a £9m VAT payment last year, profits increased by 28.3%.

Turnover across the group was up by 2.8% to £154.4m, compared with £150.2m in 2003.

The group's 21 De Vere-branded hotels performed on a par with the recently more successful Village Hotel & Leisure Clubs, recording a 2.5% increase in turnover to £88.4m. Turnover within the 14-strong Village estate rose by 2% to £37.2m during the period.

Operating profit across the De Vere hotels increased by 7% to £15.1m, while at Village it was up by 7.1% to £7.4m.

Like-for-like revenue per available room (revpar) increased by 2.2% to £58.42 at the De Vere hotels, while room rates were up by 3% to £82.36. The Village hotels recorded a 4.6% rise in average room rate to £54.26 and a 6.2% increase in revpar to £43.24.

Since the end of the half-year group turnover has increased by 4.6%, with sales rising by 3.8% at the De Vere hotels and by 2.2% at the Village properties.

De Vere also reiterated its disgust at GPG's partial takeover approach. It said the proposed wholesale disposal of the De Vere hotels was based on "poor commercial logic and a number of flawed assumptions".

Its comments were given further credence after GPG was forced to admit it had got its numbers wrong in its justification to sell off the De Vere hotels. It added, however, that it continued to believe the division would be worth more as a private business.