Peel watches costs as flat economy holds back growth

A flat economy and low inflation are making turnover growth difficult for independent company Peel Hotels, its chairman has warned.

Robert Peel said substantial increases in turnover were proving difficult to achieve because economic instability meant the company had to continue to contain its costs.

His comments came as the company published its financial results for the 12 months to 15 February. During the period Peel managed to record a 9.7% increase in turnover to £12.1m, aided by the inclusion of two new hotels. Pre-tax profit during the period, however, fell by 20% to £1.4m, down from £2m in 2002.

Total sales at Peel's six owned hotels increased by 3.6% on a like-for-like basis and revenue per available room (revpar) increased by 2%, with occupancy rising by 1.1% and average room rate up by 0.8%.

"The performance of our six hotels was mixed in the financial year under review," said Peel. "The Golden Lion in Leeds had a disappointing year due to intensive competition and greatly increased hotel supply. Our hotels in Bristol, Bradford and Newcastle showed good growth, while results for the Bull in Peterborough and the George in Wallingford were flat."

Looking forward, Peel said: "The continuing reinvestment in our properties gives us confidence in being able to continue the improvement in revpar.

"While there is still good scope to grow our hotel profits organically, low inflation and a flat economy makes substantial growth in turnover difficult to achieve, necessitating continuing efforts to contain our costs."

He added: "We remain confident in the prospects of the hotels we own and are actively seeking planning gains to expand the facilities, while carefully reviewing acquisitions and management contract opportunities."