Fairmont reports £3m loss in 2006

Rosemary Dewar , The Citizen, 20 December 2007

Top Scottish conference and leisure destination, Fairmont St Andrews, lost more than £3 million last year.

In its annual report and financial statements to December 31, 2006, St Andrews Bay Development Ltd. recorded a loss of £3,172,006, according to papers lodged with Companies House.

Current St Andrews Bay Developments Ltd. directors, Luke Hammill, a property adviser; Michael Pashley, an accountant; John Hopkins and William Westbrook, reported a turnover of £14,004,755 compared to £14,748,769 in 2005.

Included in this year's loss was £1,111,949 of "exceptional finance" costs from the re-financing of the company.

In June 2006, the financing of the company was restructured when it was acquired by two funds operated by American real estate investment fund managers, Apollo.

The bank loans were repaid and replaced by a loan of £40,726,433 from the new, Scottish registered immediate parent company, SABD Holding (UK) Ltd.

St Andrews Bay Developments Ltd is currently seeking planning permission to build 37 holiday lodges, re-develop a steading to form a spa, holiday apartments, a restaurant, public house and bistro, on the 520 acre site.

The company insists this will boost business as the current bed shortage prevents it making the most of the conference market.

However, in their report, the company's directors also acknowledge that the hotel industry is competitive and that their business depends on the number of tourists visiting the area.

At a special hearing into the current planning application, it was claimed that visitor numbers for the area are on a downward slide and council officials pledged to look into that before the planning application is decided on by councillors.

"We are also subject to a range of operating risks common to the hotel industry, including the availability and demand for hotel rooms, the desirablility of particular locations changes in travel patterns, increases in wages and other labour costs and expenses," SABD directors added.

Fluctuations in the exchange rate also had to be taken into consideration.

In February 2006, before Apollo took over the resort, its market value as a going concern was put at £53 million.