Macdonald Hotels and Resorts is to embark on a number of joint ventures to produce housing developments across the country in order to further reduce its debt and increase the number of luxury properties in its portfolio.
The firm – the UK’s largest upmarket independent hotel group – yesterday said it would use excess land available at 22 properties to build residential, mixed-use and similar developments.
And last night it said there had been offers worth £83million on projects at 11 of those sites, with other potential deals still in the pipeline.
Housing next to the firm’s Macdonald Aviemore resort is currently being considered and it is hoped the money on the residential development would generate enough cash to invest back into the neighbouring hotel.
The figures were revealed by managing director and deputy chairman Gordon Fraser as Macdonald Hotels posted its financial results for the year to March 30.
Turnover fell to £154.2million against £163.4million previously, which was attributed to the loss of revenues from the sale of three properties which continue to be managed by Macdonald Hotels.
They were sold to companies controlled by the founding Macdonald family, with the proceeds used to pay down group bank debt.
Mr Fraser said that the previous year’s pre-tax profit of £62.4million had been inflated by a £51.8million gain on the sale of land at Botley Park golf course in Southampton. This year pre-tax profits came in at £5.6million. On a like-for-like basis, profits from its hotel and resort activities were 8% higher.
Talking about the housing developments, Mr Fraser said: “It is really twofold. We have several objectives as a company: to drive the quality and improve the experience for the customer. The second one is to improve profitability and to reduce our debt.
“The non-hotel assets, or development sites, allows us to do that. We are a hotel company. The property aspect to it is a real bonus to us. Similarly, with Aviemore, there are many sites across the UK, without impacting on the hotel trading at all we are able to do these developments and release the cash in.”
Mr Fraser said that in order to really cash in on the land they own they wanted to remain part of the development rather than selling off the plots.
He added: “We said last year the way we are going to approach that is to do it on a joint venture basis rather than selling off the land, which is the easy and short-term thing to do.
“The joint venture approach with developers gives us a share in the development profits so it takes a little bit longer to take in the cash receipt but does maximise the benefit of the site for us.
“The cash receipt will go into a combination of investing in hotels and reducing the debt.”
