Fuel costs burn up profits at Peel Hotels

Peel Hotels has blamed "abnormal increases" in energy costs for a sharp fall in pre-tax profits.

The company, which operates eight hotels in provincial towns, saw profit before tax in the six months to 24 August fall by 42% from the same period a year ago to £438,000. It revealed that energy costs climbed by more than 50% to £300,000.

Chairman Robert Peel said. "The impact of the huge increase in the cost of energy affects almost everything to do with everyday business life and therefore our domestic market is being challenged and one would expect this to continue for a year or so."

However, Peel Hotels said that revenue per available room (revpar) is holding up well, falling by just 4.3%, due to a drop in occupancy.

While turnover fell to £6,819,000 from £8,764,000, the bulk of this was accounted for by the sale of the Avon Gorge Hotel in Bristol.

"In spite of disappointing interim results, our revpar is similar to the comparative period and if we can grow this in the full-year we will be better able to absorb increased costs," Peel said.

"Our overall debt level is low and we are in a good position to take advantage of any beneficial acquisition opportunities should they arise in the future."

Peel Hotels was listed on the AIM market in the spring of 1998 when Robert Peel bought the Bull Hotel in Peterborough. Robert and his brother Charles own more than 50% of the company.

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By Gemma Sharkey

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