CRIEFF Hydro, the hospitality company behind the eponymous Perthshire resort and other Scottish hotels, has cited pressure from political and economic factors as profits dipped in its most recent financial year.
The 150-year-old firm, whose portfolio includes Peebles Hydro and the Ballachulish Hotel, highlighted the impact of rising wage and business rates costs, alongside heavy investment in staff and upgrading its hotels, as it booked a trading profit of £411,575 before tax for the year ended February 28. The family-owned firm had made a trading profit of £502,211 the year before.
Chief executive Stephen Leckie said the group, which owns six hotels and manages a further four, had performed satisfactorily amid a “tough year” for the Scottish tourism and hospitality industry, with turnover climbing to £27.1 million from £24.3m.
The period saw the firm continue to grapple with the effects of the oil and gas industry downturn on conference business, with the benefits to tourism from the weakness of sterling since the Brexit vote offset by the higher supplier costs the exchange rate shift has brought.
Mr Leckie also cited the cost impact on profits from increases in the National Living Wage (NLW) and the minimum wage, which are due to go up further following this week’s Budget.
Responding directly to the Budget, which will result in the NLW rise 4.4 per cent to £7.83 from April and increases in the minimum wage, Mr Leckie said that if his company was forced to increase pay by that level across the board “we would fail, it is as simple as that.”
Mr Leckie, whose firm employs around 1,200 staff, added: “It is unsustainable [and] way above inflation. And there is no offset for living out in the country, for staff accommodation, for staff meals on duty, for uniforms – that is one of our problems with it.”
The latest accounts for Crieff Hydro show that company continued to invest heavily in capital expenditure during the period. More than £1m was invested in Crieff Hydro and its sister Murraypark hotel, and £1.4m in Peebles Hydro which was acquired alongside the Park Hotel in the Borders town in a £10m deal in early 2014. Mr Leckie noted that 90 per cent of the 132 bedrooms at Peebles Hydro have now been refurbished, as well as the public areas. “Peebles is in great shape,” he said. “It is now trading really well.”
As the fifth generation of the Leckie family to lead the business, which is understood to be Scotland’s oldest trading company, Mr Leckie said he has a responsibility to ensure the investment continues. That covers expenditure on staff training, hotel buildings and the services and activities the resorts offer.
“This business is about sustainability,” he said. “My job, in part, is to make sure we are still here in five, 10 years’ time. We must not lose that trust by stopping spending in the bad years.”
Meanwhile, asked whether the nascent recovery in oil prices has helped conference business, Mr Leckie said. “It has come back a bit, but Aberdeen hoteliers won’t tell you it is a boom time.
“It is the new norm – it is not what it used to be.”
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here