Peel Hotels blames 'toughest' financial year on VAT

In the year to 5 February the company, founded by Robert Peel in 1998, experienced a drop in revenue per available room (RevPAR) of 1.8 per cent as a result of a fall in occupancy of nearly 2 per cent while the average room rates grew only marginally.

Severe discounting​

The fall in like-for-like revenues for its venues to less than £15m resulted in the firm heading into the red to the tune of more than £200k when the business published its preliminary final year results today.

Robert Peel, chairman of Peel Hotels and former chief executive of Mount Charlotte Hotels, partly blamed the rise in VAT for the poor company performance in a financial year he described as the 'toughest' the business had faced.

"We were never going to be able to claw back the additional 2.5 per cent Value Added Tax and this together with severe discounting in the provinces, cut backs in Government spending and increased energy costs have resulted in reporting a pre-tax loss," he said.

Robert went on to explain the severe drop in profitability for the business was due to the sharp fall in margins from food and alcohol sales as the company had not passed on the rise in costs of these products.

Cycle bottom​

"The first quarter of the new financial year has been encouraging with sales growth of 5.1 per cent," Robert revealed. "We believe there is a degree of optimism, that in provincial terms, the ‘bottom of the cycle’ has been reached."

In the 12-month period, Peel Hotels sold one hotel in Wallingford, Oxfordshire the profits from which went to cut the company's level of bank borrowing. 

Despite the economic conditions the company invested in a number of its UK regional properties in the financial year and, whilst acknowledging the need to contain costs against inflation, Robert said the business would not change its strategy.

"The fact that we have maintained the quality of our product and not been tempted to slash staff costs throughout the recession, we believe, will stand us in good stead going forward," he concluded.