Menzies' focus on domestic market pays off with 22% increase in profit

Being in the right place at the right time helped independent group Menzies Hotels report double-digit increases in turnover and profit, its chairman has said.

Nick Menzies said having hotels on the sunny South Coast, not relying on US tourists and having no exposure to central London had all aided the group's strong results.

In the 12 months to 31 January turnover at Menzies increased by 16% to £38m, up from £32.6m for the same period in 2002. Operating profit was up by 22% to £10.7m, compared with £8.7m a year earlier.

Revenue per available room increased by 14% to £35.44 driven by a five percentage point increase in occupancy to 61%.

During the year Menzies sold two of its three-star hotels and has now instructed property agents to sell a further three - the Menzies Royal Kings Arms hotel in Lancaster, the Menzies Royal hotel in Scunthorpe, Lincolnshire, and the Menzies Anglo Swiss hotel in Bournemouth, Dorset - which it expects to offload in the first half of the current financial year for more than £5.5m.

Proceeds from the sales will go towards the acquisition of more hotels. But, despite having a healthy amount of money for acquisitions following the raising of £72m last year, Menzies said the greatest challenge for the group was finding properties that suited its criteria. He added that the increased interest by financial institutions in owning hotels was also making the process difficult.

Menzies said the outlook for the group was "very positive" and that sales in the first three months of the new financial year were 10% up on the same period in 2003.

Derbyshire-based Menzies operates 17 predominately four-star hotels.

Source: Caterer & Hotelkeeper magazine, 29 April - 5 May 2004