QMH profits hit by interest on debts

An increase in interest charges of £7m halved pre-tax profits at hotel group Queens Moat Houses (QMH) during the six months to 2 July.

Profit on ordinary activities before taxation fell to £7.7m, down from £14.3m during the same period last year.

Chief executive Andrew Coppel said the drop was due to an increase in interest charges on the company's debt, from £18.1m to £25.1m.

Trading profit was up by 15.3% to £56.3m, excluding the effects of exchange rate fluctuations and hotels that had been sold off or closed for refurbishment.

Underlying turnover was up 4.8% to £174.4m.

QMH has 43 hotels in the UK, 26 in Germany and 22 in the Netherlands.

In the UK, like-for-like occupancy was down by 1.2 percentage points to 71.3%. Average room rates rose by 4.8% to £59.04, giving an increase in room yield of 3%.

Food and beverage revenues fell 2.1%, mainly because of a drop in sales from banqueting functions.

In Germany, room yield grew by 11.5%, driven by a 2.4 percentage point increase in occupancy to 66.4% and a 7.6% increase in average room rate to DM157.78 (£49.02).

In the Netherlands, occupancy was static at 64.9% and average room rate grew by 14.5% to G222.59 (£61.41), resulting in a 14.5% increase in room yield.

QMH's borrowings are down from £730.9m at the end of 1999 to £668.3m.

It is not planning to sell any more hotels, apart from a couple of small ones in Germany. "We are basically down to our core portfolio," said Coppel.

by David Shrimpton