Regal profits tumble
Pre-tax profits at Regal Hotels were slashed in half during 1999 because of increased costs and a tough business environment, the group said today.
Before exceptional items, pre-tax profits fell to £10m, down from £20m in 1998. After exceptionals, the group recorded a £13.8m pre-tax loss. Total sales, however, were up 6% to £124.6m.
The results were in line with those predicted by City analysts after Regal issued a profits warning in June last year.
Managing director Charles Holmes said: "Sales have shown an improvement, although the millennium holiday was a disappointment. There has been an overall increase in group costs, which has resulted in a reduction in hotel profitability."
During the year, Regal re-flagged 29 of its 110 properties as Corus hotels. It has refurbished 933 bedrooms, 16 bars and restaurants and 19 meeting rooms as well as building 105 new bedrooms.
In June, Regal put up for sale 33 hotels that were deemed unsuitable for conversion to Corus. It succeeded in selling only three of these before the end of 1999, although a further five have been sold in 2000. Regal is expecting to make a £12m loss on the sales. It is now considering "all opportunities" for selling off the remaining hotels, "including, in some cases, for property development".
Measures taken to reduce costs have included the "streamlining" of central operations and the cancellation of plans to move into a new head office.
As expected, the Restaurant Partnership made a loss of £1.9m. Regal's administration expenses rose because of extra sales and marketing costs, and increased personnel costs following the acquisition of the 25-strong County Hotels group in January 1999.
Exceptional costs during the year included those relating to Regal's decision to end its UK master franchise agreement for Country Inns and Suites by Carlson, the cost of re-branding the County hotels and closing down County's Windsor head office, and expenses incurred over the aborted move of Regal's own head office.
Sales per available room rose 2.2% to £22,876, but occupancy was down by nearly half a percentage point to 64.4%. Average room rate went up 1.6% to £44.26.
Occupancy in London was affected by substantial refurbishment work on the Plaza on Hyde Park hotel.
The hotel group is also facing a takeover bid from London Vista, a subsidiary of Regal's biggest shareholder, MUI. The bid timetable was suspended in January "pending the resolution of an issue pertaining to the code on takeovers and mergers." It remains frozen.
