Choice Hotels nearly halves its half-year losses
The group - which owns, leases or manages 57 hotels in the UK and Europe and oversees 313 franchises on the Continent - slashed its pre-tax losses to £1.3m (down from £2.4m) over the six months to 30 June.
This improvement stemmed from the achievement of a £400,000 operating profit, compared with an £800,000 loss in the first half of 2003.
Group turnover rose by 7.4%, from £35m to £37.6m. The figure includes £1.8m from franchising fees, which grew by 9% following a drive to raise standards across the brands.
More than 75% of group turnover is made in the UK, where occupancy rose by 2.5 percentage points to 62.9%. Coupled with a small increase in average room rate, this rise boosted yield per available room by 5.5% to £24.29 (from £23.02). Growth in yield per available room accelerated towards the end of the half-year, rising to 8% in June.
At CHE's London conference and banqueting venue, the New Connaught Rooms, turnover grew by 15%, from £2.5m to £2.9m, and gross operating profit increased from £800,000 to £1m.
Although its hotels in Continental Europe experienced some recovery and boosted gross operating profit by £300,000 to £1m, France and Germany continued to suffer from the dearth of US visitors, and CHE anticipates that they will take some time to return to pre-Iraq levels.
The stricter application of brand criteria to raise standards across the estate resulted in the termination of 26 franchises, six of them CHE's own properties. But CHE also signed up 16 new franchisees and signed its seventh management contract during the half-year.
In August, CHE raised £5.06m through a share issue which it will use to add air conditioning to bedrooms in Quality hotels and to upgrade meeting and conference facilites.
"Following the financial restructuring of the group, which commenced at the beginning of 2001 and which was hampered by the economic and political events of 2001 and 2003, the group operated well under very difficult circumstances, but with some uncertainty for the future. The fund-raising has removed these doubts," commented chairman Peter Catesby.
CHE currently has two new limited-service hotels under construction in Tewkesbury and Derby.
by Angela Frewin
