HEALTH spa Stobo Castle has revealed a seven per cent lift in pre-tax profits to £768,000 after a year of upgrades at the luxury Borders resort.
Revenue was also on the up, climbing nine per cent to £7.1 million from £6.5m in the year to December 31.
And the five-star spa and hotel’s owner, Stephen Winyard, has set the business a target of achieving an operating profit of £1m in the current financial year.
Within days of the Brexit vote Stobo Castle published a statement of intent on its Facebook page, pledging to double its investment to more than £1m over the following 12 months. Now, eight months on, Mr Winyard said the ongoing strategy had proven that continual upgrades appealed to both new and returning guests.
“The policy of constant reinvestment is paying off. We said we weren’t going to sit on the fence, we were going to accelerate and double investment, and that acceleration has certainly helped,” he said.
Mr Winyard, who runs the family-owned resort opened by his parents in 1978, said added that 2017 had got off to a strong start, with revenue up 17 per cent on January and February 2016.
He said: “That is a reflection of the appetite the guests have for returning; it’s no accident that our turnover is up. That increase isn’t sustainable however as we had some very good months last year, but I’m very confident that we can generate an operating profit of more than £1m this year.”
The increase in turnover has been helped by Christmas gift voucher sales. For the first time, this exceeded £1m, and now represents 14 per cent of the spa's total sales. Voucher sales were up five per cent, having grown 18 per cent to £943,000 in 2015.
Mr Winyard said the spend on gift vouchers was anything between £50 to £500 pounds, with day visits being the most popular option. The average spend per voucher was about £100.
“I can’t think of any other establishment in the hospitality industry in Scotland or indeed the UK that could generate that level of spend in gift vouchers at Christmas,” he said.
Mr Winyard said there was no plan to expand the number of beds in the hotel, currently 52, but to continue with upgrades that he said encouraged loyalty. “In 2014 the turnover was £6.12m, so in the last two years we have grown by one million, which is testament to that policy and the growing awareness of our brand,” he said.
Staff numbers were 182, up from 173, with Mr Winyard noting this would likely rise in 2017. “The success we’re having will lead to the creation of more jobs, and indeed more trade for local businesses”.
About 30 EU nationals work at the resort and Mr Winyard said he had no concerns that any foreign nationals already resident in the UK would in any way be compromised by Brexit.
“They provide a very valuable contribution to our success and periodically we fly the Polish and Hungarian flag as a measure of our appreciation,” said Mr Winyard.
Stobo Castle incurred £92,000 in exceptional costs this year, mostly relating to the company buying back 25 per cent of share capital. This compares to £11,000 in 2015.
“The strength of the business is somewhat understated in the operating profit,” he said.
In addition there was £94,000 in donations, compared to £49,000 the previous year. Mr Winyard said: “This is charitable work, one-off sums in respect of local community projects and so forth, so there is almost a doubling of donations.”
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