APEX Hotels has highlighted resurgent demand from the corporate and leisure markets as it hiked profits and saw revenues return to pre-Covid levels in its most recent financial year.

The company, which has hotels in Dundee, Edinburgh, Glasgow, London, Bath and, since July, Pitlochry, booked an operating profit of £14.5 million for the year ended April 30. Profits surged as turnover leapt to £74.8m from £47.3m.

The results build on the return to the black achieved by Edinburgh-based Apex the previous year, when it turned a loss of £11.2m into a profit of £2.9m, following the upheaval arising from Covid restrictions.

Occupancy increased to 78% from 51.4% during its latest accounting period, while revenue per available room – a key industry metric – climbed to £114.69 from £66.69.

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Writing in the new accounts, chief executive Angela Vickers notes that, following three years of disruption that ended with the lifting of UK-wide Covid restrictions in March 2022, Apex “experienced a significant increase in demand across all our hotels, from both the corporate and leisure markets”.

Ms Vickers said: “This resulted in significant growth in revenues on the previous financial year, more akin to those prior to the Covid pandemic.

“Alongside the growth in revenues, the focus remains on tight operational cost efficiencies resulting in the delivery of a group operating profit of £14.5m to April 2023, up on the £2.9m achieved in the year to April 2022.

“Included within operating profit, were insurance monies of £2,500,000 (2022 £Nil), received in relation to losses in connection with the Covid-19 pandemic.”

The accounts show that it sold its only three-star property, the Apex Haymarket Hotel, in September 2022, under a strategy to focus on the four-star market.

The results offer a ray of hope for Scotland's troubled hospitality and tourism sector, which was badly impacted by the pandemic and has more recently come under pressure from significant economic challenges, from labour shortages and soaring costs to surging inflation and interest rates.

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Earlier this week, a major survey released by the Scottish Tourism Alliance found that, while this year has seen a welcome upsurge in visitors from Europe and North America, the domestic market has contracted sharply amid the cost of living crisis. Nearly half (48%) of respondents reported decreased profits, and in most of those cases firms had experienced year-on-year declines of 10% or more.

Apex reports in its accounts that the group “remains in a strong strategic position, with a wide geographical spread across key cities within the UK”, adding that it had “now made its first move into developing a rural proposition to widen our guest offering”.

In July, the company acquired the Pine Trees Hotel in Pitlochry – a “classic Scottish country house hotel” – for undisclosed sum. The hotel has 32 bedrooms and a six-bedroom coach house, set within 10 acres of secluded gardens.

Apex, which saw employee numbers increase to an average of 817 from 708 last year, declared at the time that the acquisition was the “first step in an ambitious plan targeting popular UK destinations”.

The company had shortly before sold its London Wall hotel, which allowed it to repay its facilities with Bank of Scotland in full, though the bank continues to provide it with access to a £100,000 revolving credit facility. It notes in the accounts that proceeds from sale of London Wall would be used to fund growth plans and expands its portfolio.

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Apex said it has secured a five-year term loan of £47.9m and a £10m revolving credit facility with Barclays.

Ms Vickers said: “This year we have built upon strong foundations in 2022, with a renewed confidence in the market as demand from our UK and international guests returns.

“Our ambitious acquisition strategy will help diversify and expand our portfolio, delivering more choice through a wider range of destinations for our guests.

“This year we have successfully matched revenue and occupancy growth with a healthy profit margin, allowing us to sustainably re-invest in the business and our people. This includes doubling down on our effort to build a sustainable, community focused organisation through our ESG (environmental, social, and governance) strategy.

“We look forward to a strong year ahead as we continue to expand the business and grow our market position as one of the UK’s leading independent 4-star hotel groups.”