Hotel company losses now £14.5m

The Courier, 27 November 2007

The company behind the Fairmont golf, hotel and leisure complex near St Andrews is now carrying forward accumulated losses of £14.5 million after losing a further £3.172 million in the year ended December 2006.

The figures, revealed in accounts lodged with Companies House in the past few weeks, come as St Andrews Bay Development Ltd presses ahead with plans for a £20 million expansion which could provide over 100 additional rooms and possibly help the extensive complex make some profit.

Plans about to be determined by Fife Council envisage the redevelopment of a steading, and substantial new building work that would create holiday apartments, residential lodges and other facilities including a spa, pub and bistro. Also submitted are separate plans for improvements to the cliff-top golf clubhouse.

The application has fallen foul of local and national conservation bodies and many local residents, but there is support from within the leisure industry and the Fife business community for a business that employs almost 400 people.

The complex was sold in June 2006 to two funds operated by American real estate investment fund managers Apollo in a deal said at the time to be worth $100 million, and Fairmont was brought in to manage the extensive range of facilities.

At that time bank loans were repaid, and they were replaced by a loan of £40 million from the new intermediate parent under- taking, St Andrews Bay Development Holding (UK) Ltd.

The recently lodged accounts show that shortly before the sale to Apollo the complex was valued at £53 million, and that the loss to the year end had risen from a loss of £2.66 million the year before, and some £5 million the year before that.

The latest £3.1 million loss, on a turnover of £14 million, is made up of an operating loss of just over half a million pounds, plus other interest and similar charges of over £2.6 million. These include an exceptional refinancing cost of £1.1 million.

The directors’ report attached to the accounts points out there were no significant changes to the company’s operation during the year; that the business is dependent on the number of tourists visiting the area; and the hotel industry is “highly competitive.”

“We are also subject to a range of operating risks common to the hotel industry, including the availability and demand for hotel rooms, the desirability of particular locations, changes in travel patterns, increases in wages and other labour costs, and expenses central to the operation of our business” says the report.

Yesterday a spokesman for Fairmont Hotels & Resorts said that there is commitment to further investment with a £10 million refurbishment programme within the hotel.

In addition, he said, there is the planning application for the 37-lodge development which is “an important strand of future growth and profitability”.

“While we operate in a competitive market, our occupancy rates remain strong and the proposed development will place us in an even stronger competitive position to attract additional income for the resort and local area.

“In addition to enhancing our facilities and attracting new visitors, the development will enable us to strongly grow our presence in the thriving conference market where we are currently having to turn away business due to a lack of capacity.

“The investor suites will also play a vital role in delivering additional income,” he said.

“We believe this is a positive approach to supporting business growth and will cater for the holiday market without consuming housing in St Andrews to the disadvantage of local people,” the statement concluded.