Malmaison and Hotel du Vin (HDV) suffered a loss of £5.4m in the first half of the year, and saw £19m wiped off the value of its property portfolio.
Although the hotel group's turnover in the six months to 30 June increased 24% to £52m (2007: £41.9m) it saw its losses increase from £3.8m a year earlier to £5.4m.
The company, which is majority owned by property firm Marylebone Warwick Balfour, said its hotel properties had depreciated in value over the past year from £529m at 31 December 2007 to £510m.
Despite this chief executive Robert Cook said he was "heartened" by the group's performance in the current "tougher market conditions".
He said: "I look forward to continuing to grow and develop the business as one of the UK's leading lifestyle hotel operators."
Overall occupancy at the hotels was 81% (2007: 78%) with average room rate increasing to £117 (2007: £115).
The group has acquired a site in Canterbury and is finalising the acquisition of a further site in Chester, both of which are planned to be developed as HDVs opening in 2010.
It plans to open a further four hotels during the second half 2008, three of which, Poole (September), Newcastle (October) and Edinburgh (November), will be HDV properties. A fourth property will be an 80-bedroom Malmaison in Aberdeen, also opening in November.
Malmaison loses two key executives >>By Gemma Sharkey
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