Apex Hotels enjoys rising revenues and profits
Apex Hotels has reported a rise in turnover and profits for the 2017 year to April though sale and leaseback deals and asset value impairments dented operating profit.
The Edinburgh-based group notes the number of rooms sold rose 6.7 per cent to 416, 630 (2016: 390,261), boosted by new openings in Glasgow and an extension to its City of London hotel, which together added 134 new rooms.
Revenue for the year rose 6.2 per cent to £65m though operating profits were down 3.4 per cent to £14.1m (2016: £14.6m) as administrative expenses rose almost 10 per cent to £48.2m.
Operating profit was weighted down by a 7.4 per cent increase in operating lease costs to £4.3m and a £1.14m impairment on the carrying value of its hotel assets.
Despite Apex opening new a new hotel in Glasgow in the year and extending the City of London property, staff numbers dipped to 775 at the April year end, from 790 in 2016.
Post balance sheet, Apex opened a new hotel in Bath in August of this year for a total development investment of £39m - £20.7m of which was realised in the 2017 year to April.
The 177-bed hotel in Bath, which saw Apex create 120 new jobs, takes the portfolio to 10 hotels.
The company notes it secured two sale and leaseback agreements in the 2017 year to April on the Apex City of Glasgow Hotel and the Apex City of Bath Hotel on annual rents of £120,000 and £400,000 respectively on long term leases expiring in 2166.
In March of this year Apex notes, “an amendment was made to long leasehold agreements to increase the annual rental by £200,000 in return for income of £7,000,000”.
Rent on sale and leasehold properties is subject to annual inflationary increases linked to retail price inflation (RPI).
As a result, interest charges were down 16 per cent at £3.6m (2016: £4.6m), lifting pre-tax profit almost 3 per cent for the year to £10.5m (2016: £10.2m).
Apex notes average room rates in the year rose to £126.67, up from £124.99 in 2016 and occupancy rose to 89.3 per cent, up from 87 per cent in 2016.
Commenting on the full-year results, Apex chief executive Angela Vickers said: “We are proud to reflect on a financial year that shows considerable capital investment and consistently strong financial performance.
“In January we promised an exciting year of development and investment and our stunning new hotel in Bath has delivered that - and created 120 jobs.
“It is the city’s largest in terms of bedroom numbers and events space, and also features a restaurant, bar, and pool and gymnasium so it appeals to business and leisure travellers alike.
“Our track record in the four-star market is achieved through our high customer service and brand standards, as well as our ongoing commitment to continued investment in our existing offering.”
Vickers added: “We design and upgrade our portfolio with the customer at the heart of the process to ensure they have the best possible experience.
“With that in mind our investment plans don’t stop here – there’s more exciting news in the pipeline with multi-million pound refurbishment works set to be announced in the coming weeks.
“In the longer term we anticipate the continued growth of our hotel and hospitality operations through extension of existing sites where possible and acquisition of new development sites as opportunities arise.”