Hotel group invests for long-term growth
Principal Hotels, the group that will operate the Grand Hotel in Birmingham, has reported a drop in profits as it embarks on a three-year investment programme.
It invested more than £140m last year in re-building, refurbishing and re-positioning its portfolio of hotels, which operate under the Principal and De Vere brands.
The group’s owner, Starwood Capital, expects to spend a further £100m this year.
Principal Hotels’ chief executive Tony Troy said: “We anticipate that by the end of 2017 the full positive impact of this three-plus year investment programme will be realised and will be reflected in strong growth and enhanced performance from 2018 onwards.”
In May this year, the group entered a strategic partnership with Hortons’ Estates on the Grand Hotel in Birmingham and the £30m investment will see a full re-development of the 180 bedrooms and suites.
The investment programme saw revenue and earnings drop due to hotel closures and business disruption. Revenues from its most disrupted properties – London, Manchester and Wokefield Estate – were down 40% to £30m. Revenues across its other hotels and venues rose slightly to £260m from £256m.
EBITDA was down £10m, from £99m in 2015 to £89m in 2016; while operating profit stood at £57m, down from £66m.
Occupancy for 2016 was down three percentage points to 72%, although this was offset by a £5 increase in average room rates, to £79.
