Activities

Macdonald Hotels is the UK’s 10th largest hotel group and Scotland’s biggest company. It owns, jointly owns or manages a stable of three- and (predominantly) four-star hotels in the UK. It additionally owns 10 timeshare and leisure resorts in the UK and Spain. 

Timeline

• 1990: Donald Macdonald co-founds the group with Sandy Orr and Donald MacDonald (no relation) who are both now with the City Inn group. Macdonald Hotels starts out with two properties – Ardoe House near Aberdeen and Waterside Inn at Peterhead.
• 1993: The group adds eight more hotels to its portfolio.
• 1995: Macdonald Hotels buys four more properties and takes over the management of six UK and four Spanish resorts owned by Barratt International Resorts, a leading European timeshare owner and operator.
• 1996: The group floats on the stock market.
• 1997: Macdonald Hotels buys a 50% stake in Barratt Leisure Resorts.
• 1999: The Macdonald Holyrood hotel, the group’s first new-build joint venture with the Bank of Scotland (BoS), opens next to the new Scottish Parliament in November. The two join forces to build and operate hotels in key city centre locations. Macdonald Hotels also takes on the management of 11 Arcadian hotels bought by financier Guy Hands until June 2001.
• 2001: The group launches its Vital health, fitness and beauty brand.
• April 2001: Macdonald Hotels and joint-venture partner BoS buy 48 Heritage hotels from the Compass Group for £235m. It also buys out the remaining 50% stake in Barratt Leisure Resorts, adding timeshare sales, lodge rental and leisure packages to the sales mix. With 30,000 owners, the group becomes one of Europe’s leading timeshare operators.
• August 2003: Macdonald sets up Skye Leisure Ventures to lead a management buy-out of the company. The initial £145m offer from June is upgraded to £157m after a re-evaluation of the estate. The total price rises to £590m as Macdonald Hotels buys out BoS’s 50% stake in Heritage hotels, which are rebranded as Macdonald hotels.
• 2004: In October, Macdonald Hotels buys two Hilton hotels to join the two it already manages at the Aviemore Highlands Resort. It also operates the 1,000-capacity conference centre that opened in September and 18 self-catering lodges at the resort.
• September 2005: The group opens its first hotel under a new brand - The Lodge by Macdonald - in Cardiff, with a second scheduled to follow in Oxford. The brand targets the leisure and the busines market , offering luxury rooms at affordable prices and executive facilities.
• February 2006: The group announces plans to sell at least 20 properties valued at more than £200m in sale-and-manageback deals. It plans to reinvest the cash in its five-star properties.
  
  

Operating data

The group reported a £4.4m loss for the 11 months prior to going private in August 2003.

For the 18 months to 30 September 2004, the group made pre-tax losses of £19.1m on turnover of £189m. An operating surplus of £31m (including £8m from property sales) is exceeded by interest payments of £50m.

Total number of hotels and resorts: 75

Number of timeshare/leisure resorts: 10, including four in Spain

Number of employees: 6,092

Key directors

Executive chairman: Donald Macdonald
Deputy chief executive: David Guile
Group managing director: Gerry Smith
Finance director and company secretary: Gordon Fraser
Sales and marketing director: Justine Ford

Contact

Macdonald Hotels
Whiteside House
Bathgate
West Lothian
EH48 2RH

Tel: 01506 815 200

Website: http://www.macdonaldhotels.co.uk

Commentary

Macdonald Hotels has grown rapidly and profitably in the 12 years from its formation in 1990 to its last full financial year as a public company, when it reported pre-tax profits of £16.1m on turnover of £139.7m for the 12 months to October 2002.

However, the group’s consistent performance was not reflected in its share price, which swung between a low of 13pp and a high of 240p.This, allied to the realisation that the costs and time involved in being a listed company outweighed the benefits, prompted the management buy-out in late 2003.

The move – Scotland’s biggest deal to go private – has affected the company’s bottom line since. The £4m loss it reported for the 11 months before it went private deepened to a £19.1m loss for the 18 months to 30 September 2004.

However, it has also allowed Macdonald Hotels to invest more heavily in its estate and to offload around 17 non-core properties by the spring of 2005. In May 2004 it announced a £150m investment programme over two years to develop new hotels and to add leisure clubs and conference facilities to existing sites. The project includes improving bars and restaurants and adding more bedrooms.

2004 saw the fruition of a £30m scheme hatched in 1998 with BoS and Teesloch plc to convert the Aviemore Highlands Resort into a world-class tourist destination.

The group is pushing a £20m project devised nine years ago to develop Pittodrie House hotel in Aberdeen. It has won planning permission to add 40 bedrooms and a health club and has outline planning permission for 90 timeshares and a golf course, but faces local opposition to plans to build 30 luxury homes on the site.