Private operator Macdonald Hotels made a £30m loss last year as it shelled out on its estate to reposition the brand at the luxury end of the market.
Despite turnover increasing 4% and hotel operating profit up 9% on last year, £68m-worth of capital expenditure hit profits hard in the year ended
29 September 2005.
Gordon Fraser, Macdonald's finance director, said: "We have invested heavily in developing a portfolio of quality assets, but that enhancement has come at a short-term cost."
Macdonald is working with financial services company Deloitte on a sale-and-leaseback deal for 23 of its properties.