Regional UK hotel group Peel Hotels said today it was confident about the prospects for the rest of this year, despite an 8.6% drop in pre-tax profits during the first half.
Turnover during the 28 weeks to 31 August was up by 16.6% to £6.49m, against £5.57m at the same point last year.
But pre-tax profit fell by 8.6% to £903,956, from £989,590 a year ago.
This was largely the result of an increase in interest payments of more than £200,000 compared with the same period in 2002. Operating profits were actually up by 8% to £1.56m.
Interest charges went up as a result of a new arrangement that Peel says will protect it against interest rises over the next few years, as well as the £9.4m purchase in June 2002 of the Avon Gorge Hotel in Bristol and the George Hotel, Wallingford.
Like-for-like sales at Peel's six owned hotels grew by 0.9%, but revenue per available room (revpar) dropped by 0.6%. This was the result of a 5.3% increase in average room rate and a 5.6% fall in occupancy.
But the company said it would achieve revpar growth for the year as a whole.
Management fee income fell by more than £112,000 as forecast, as Peel now manages only five hotels on behalf of Grace Hotels.
Nearly £650,000 was spent on the owned hotels during the six months. Projects included adding 23 bedrooms at the Caledonian in Newcastle and redeveloping nine bedrooms at the Bull in Peterborough.
Peel said the third quarter of the financial year had "started well in comparative terms".
And it added: "This, together with the many and various improvements to all our hotels, gives us grounds for cautious optimism on trading prospects for the full year."